India VIX Spikes 3% Amid Global Bond Sell-Off, Market Turns Cautious

Market Sentiment Turns Bearish

On Thursday, May 22, investor sentiment across Indian equity markets shifted sharply towards caution. The India VIX index, a key measure of market volatility, spiked 3%, reflecting heightened fear and uncertainty.

At 9:35 AM, the India VIX rose to 18.04, marking a 2.8% jump from the previous session. This spike indicates that traders are pricing in greater market swings over the coming sessions.

Meanwhile, key benchmark indices were under pressure:

• Sensex dropped by 767.50 points or 0.94% to settle at 80,829.13
• Nifty fell 230.85 points or 0.93% to 24,582.60

The market breadth also leaned in favor of the bears:

• 1,523 stocks declined
• 1,251 stocks advanced
• 158 stocks remained unchanged

Global Bond Market Sparks Concern

The volatility was primarily triggered by a sharp rise in global bond yields, unsettling investors across major markets.

Key Developments:

• U.S. 30-year Treasury yields surged above 5%
• Japan's 40-year bond yield touched 3.5%

These movements reflect a broad sell-off in bonds, as investors brace for higher debt servicing costs.

The sell-off was intensified by:

• The U.S. Congress is progressing on a significant tax and spending bill, potentially widening the federal deficit
• The Federal Reserve's  with no signs of rate cuts amid ongoing inflation worries

Summary

• India VIX spiked by 3%, reaching 18.04, signaling increased market volatility
• Sensex and Nifty fell nearly 1% each, reflecting negative investor sentiment
• Global bond yields soared, triggering a ripple effect across stock markets
• Market breadth was skewed towards the bears, with more declines than advances
• Ongoing fiscal and monetary developments in the U.S. contributed to risk-off sentiment globally