Source: Business Today
Markets tumble; missile exchanges, blackouts, and IPL match cancellations fuel investor anxiety
India’s market volatility gauge, India VIX, was up by over 8% on Friday. This went along with an extraordinary military escalation at the clash between Indian and Pakistani; it is also a second consecutive day of sharp spikes in volatility arising owing to the already heightened geopolitical tension and cross-border missile activity.
Volatility at a high
The India VIX shot up 8.19% to 22.7, the highest level since April 8, as said by Bloomberg. This follows a 12%-ish spike recorded on Thursday, inculcating an atmosphere of market unease. Essentially, India VIX gauges the anticipated short-term volatility in the market based on spells of uncertainty associated with options on the Nifty50 index.
Markets’ Reaction
The Indian share markets sharply reacted to developments. The broad-based Nifty50 dropped 1.39% or 338 points to close at 23,935. The BSE Sensex surrendered 1.7%, as it lost 1,366 points to close at 78,968. The option volumes fell on the INR-USD, more than doubling their five-day average amid the tension according to Bloomberg.
Missile Strikes and Military Reaction
This volatility followed a major escalation across the border late Thursday, with Pakistan firing eight missiles at places in Jammu and Kashmir, including Satwari, Samba, RS Pura, and Arnia. Indian air defense systems have shot down all incoming missiles.
India lost no time in retaliating, destroying air defense radars and military installations counter-border using a combination of kinetic and non-kinetic methods. The Defense Ministry had confirmed that the attempted targets of Pakistani strikes at military stations in Jammu, Pathankot, and Udhampur had been effectively neutralized.
Civilian Impact and Blackouts
Due to the missile attacks, the electricity supply was beset withf disruptions in several cities, including Jammu, Pathankot, Amritsar, Jalandhar, Hoshiarpur, Mohali, and Chandigarh Nearby, Amritsar-Mohali-Jalandhar being a cluster, the disruption led to the cancellation of an IPL match scheduled in Dharamshala, Himachal Pradesh (just 80 km from Pathankot airbase), though power was restored later in the evening.
An air warning was also sounded in Chandigarh on Friday, clamoring for further escalation.
Operation Sindoor and Background
This escalation roots in India’s retaliatory gesture code-named ‘Operation Sindoor’, initiated in the early hours of May 7. Having conducted retaliatory, merciless strikes on terror infrastructure at nine locations in Pakistan and (Pakistan-occupied Kashmir) POK by the Indian Armed Forces, the terror attack in Pahalgam on April 22 claimed the lives of 26.
Expert Outlook
Despite the geopolitical upheaval, market experts urge caution over panic. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized India’s strong military and economic standing. “Investors should not panic and exit from the market now. Remain invested, monitor the developments and wait for the dust to settle,” he said.
