Fear gauge India VIX jumps 11% as global weakness drags domestic indices

India's volatility gauge, the India VIX, climbed sharply in Friday's trade, signalling rising uncertainty in the equity markets amid broad-based weakness across global indices. The fear index surged 11.02 per cent to 13.47 level, according to NSE data. India VIX reflects the market's expectation of volatility over the next 30 days based on Nifty50 options, and an uptick typically indicates heightened caution among investors.

Domestic benchmarks retreated after a two-day rally, tracking global risk-off sentiment. A steep sell-off in artificial intelligence (AI) stocks in the US, along with mixed labour market indicators, weighed on investor sentiment. The Nasdaq Composite dropped 2.15 per cent overnight, triggering concerns about further volatility across markets.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the spike in volatility mirrors global nervousness. He said the sharp pullback in AI-linked stocks has intensified worries over elevated valuations. While several market participants have raised caution over a potential bubble, Nvidia's CEO played down such fears, pointing to sustained demand for advanced AI systems.

Vijayakumar added that any meaningful correction could attract renewed buying interest, particularly if valuations turn favourable. However, he cautioned that the current market phase may remain volatile as investors reassess global growth signals and sector-specific risks.

On the domestic front, Vijayakumar flagged excessive speculative activity in certain newly listed stocks, urging retail investors to stay disciplined. He advised focusing on fairly valued, high-quality companies and using market dips as buying opportunities.

He said India, which has trailed global markets in this year's AI-driven rally, could potentially gain if investor preference shifts toward non-AI sectors. However, he emphasised that a sharp global correction would have spillover effects across markets, including India.