Nifty rebounds as relief rally tests market volatility
Nifty rebounds as relief rally tests market volatility
Indian shares stage a relief rally with the Nifty up 3.5% over two sessions, but a modest drop in volatility keeps hedges in place amid West Asia tensions and softer crude.
Mumbai is witnessing a relief rally in Indian equities as the Nifty climbs 3.5% over two trading sessions through Wednesday, helped by signals of de-escalation in West Asia and softer crude prices. Yet the market mood remains fragile, with the volatility gauge VIX easing only about 7% during this period and staying at elevated levels. That suggests traders are still protecting portfolios, unsure whether the current peace will last or if another wave of selling could come.
On Wednesday, the Nifty rose 1.7% and the VIX dipped 0.4% to 24.64, but the typical pattern of volatility compressing as hedges unwind did not play out this time. The persistent elevated VIX indicates hedges remain in place, and risk appetite remains cautious. A market observer noted that the bounce could be a bear-market technical rebound rather than a durable bottom.
Historically, volatility has surged when nerves run high; the VIX had jumped about 42% in the past month even as the Nifty declined roughly 8.5% during that period. In 2026, the fear gauge has shown even sharper moves, underscoring fragile sentiment. Despite the caution, bulls have made a comeback with sentiment turning a bit more constructive as crude prices stay soft and diplomatic talks advance.
Analysts see potential for further gains if crude remains soft and diplomacy shows progress, with some projecting the Nifty could head toward the 23,800 level. Sectors such as autos, metals, and BFSI are viewed as potential leaders of the ongoing recovery, though traders remain wary about sustaining gains in a market rattled by geopolitical headlines.
