India VIX Drops 6% on Monthly Expiry; Bulls Gain as Trump Tariffs Blocked

Volatility in the Indian equity markets subsided on May 29, as investors reacted to the positive global development stemming from a US trade court ruling that blocked former President Donald Trump’s controversial tariff plans. The decision, widely seen as a check on aggressive unilateral trade actions, brought relief to global equity markets, including India, which had been reeling under fears of retaliatory trade barriers and economic disruption. The India VIX, a key measure of market volatility based on Nifty option prices, declined sharply to 16.93, registering a 6% drop in early trade.

Highlights:

• India VIX fell nearly 6% to 16.93, signaling a drop in volatility.

• Trump’s proposed tariff agenda was blocked by a US federal court.

• Market sentiment improved on monthly F&O expiry day.

• Broader market trend remained in favor of bulls with more advances than declines.

US Trade Court Ruling Eases Global Trade Concerns

The US trade court’s decision to halt Trump’s sweeping reciprocal tariffs delivered a key blow to his trade policy framework, which had been criticized for injecting volatility into global markets. While the Trump administration has appealed the ruling, its immediate impact has been to calm fears of a trade war resurgence, especially with the European Union and China. Legal experts noted that the case could eventually head to the US Supreme Court, but for now, the blocking of tariffs has halted a key source of uncertainty in global trade, benefiting equities worldwide.

Highlights:

• US federal court blocked Trump’s aggressive tariff expansion plan.

• Markets welcomed the legal intervention as a stabilizing factor.

• Case may move to Supreme Court, but near-term tensions have eased.

• Trade-sensitive stocks globally rallied on reduced tariff concerns.

Equities Firm, Market Breadth Signals Bullish Bias Amid F&O Expiry

The BSE Sensex rose 169 points to trade at 81,481.53, while the Nifty 50 gained 38.50 points to 24,790.95 in early Thursday action, supported by improved sentiment and lower volatility. Market breadth favored the bulls, with 1,653 stocks advancing versus 1,308 declining and 157 remaining unchanged. Despite the overall cautious undertone due to monthly F&O expiry, investors showed risk-on behavior as clarity emerged around the global trade outlook. Elevated intraday volumes hinted at institutional activity aligned with expiry-related adjustments.

Highlights:

• Sensex and Nifty traded in positive territory on reduced global jitters.

• Broader market saw 1,653 stocks advancing, confirming bullish tilt.

• F&O expiry day saw elevated volume-driven moves.

• Expiry-related adjustments added to short-term positioning volatility.

Analysts See Continued Consolidation; Technical Headwinds Persist

Technical analysts remained cautious, citing the Nifty’s ongoing range-bound behavior between 24,500 and 25,000. Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, highlighted that unless the Nifty decisively breaks above 25,100, bulls are likely to face strong resistance. On the downside, a breach of 24,700 could unleash fresh selling pressure. Meanwhile, VK Vijayakumar of Geojit Investments emphasized the importance of quality in mid and smallcap stock selection, noting that these segments have shown strength post-earnings, but valuation concerns persist.

Highlights:

• Nifty remains locked in a tight 500-point consolidation band.

• Resistance near 25,100 and support at 24,700 will guide near-term direction.

• Mid and smallcaps remain active but need valuation discipline.

• High volatility and technical uncertainty could fuel bull traps and whipsaws.

Street Remains Indecisive Despite Positive Cues

Despite the positive global news flow and dip in India VIX, analysts noted that market mood remains indecisive. Elevated volumes during minor corrections suggest fragility and a propensity for sharp intraday swings. Until a clear directional breakout or breakdown emerges, traders can expect more sideways action, frequent bull and bear traps, and erratic price movements. Tactical trades and stock-specific strategies are likely to dominate over broader directional bets in the immediate term.

Highlights:

• Despite cooling VIX, market remains directionless and prone to volatility.

• Absence of a breakout keeps investors on edge.

• Tactical and stock-specific plays preferred amid uncertainty.

• Elevated intraday swings reflect underlying nervousness in sentiment.