India's fear gauge logs sharpest spike since Covid shock in 2 days

India's volatility index, known as the VIX, has surged nearly 50% in just two trading days, marking its steepest increase since the onset of the Covid-19 pandemic. This spike comes amid escalating geopolitical tensions following recent military actions involving the US and Israel against Iran. As of Wednesday, the VIX reached a 10-month high, closing at 21.14 after a 23.4% rise. The benchmark Nifty 50 index also fell by 1.55% to end at 24,480.50, reflecting investor anxiety. Analysts warn that such significant volatility spikes typically signal prolonged market uncertainty. Concerns are particularly high regarding the potential closure of the Strait of Hormuz, a vital global oil shipping route, which could further inflate India's oil import costs, exacerbating inflation and prompting investors to seek safer assets like gold and the US dollar. Experts suggest that traders should exercise caution, given the current market instability and recommend strategies such as hedging portfolios with options. This heightened volatility is mirrored globally, with the CBOE VIX also rising significantly, indicating widespread unease among investors. Market participants are urged to remain vigilant as the situation develops, and the potential for short-lived market recoveries remains under scrutiny until geopolitical tensions subside.