Election Jitters: Market Volatility At Almost 20-Month High As Verdict Draws Near

India's volatility gauge rose to an over 19-month high on Tuesday, a day after the fifth phase of elections, with Maharashtra recording the lowest voter turnout among other states on Monday.

The markets' fear gauge, India VIX, rose as high as 8.66% in early trade to 22.3, and was up 7.1% at 22.02 as of 10:02 a.m. The previous highest level was seen at 22.3 on Sept. 26, 2022.

An approximate voter turnout of 57.82% was recorded as of 9 p.m. on an all-India basis, while Mumbai recorded its second-highest voter turnout in 30 years at 52.4%.

We were at ~29 VIX during the last general election, so it is normal to see rise, according to Ajit Mishra, senior vice president, research, Religare Broking Ltd. "We feel the market tone will remain positive until we break 22,300."

Concerns regarding consistent FII selling, India VIX still above 20 levels, ongoing general election polling and the outcome could keep volatility higher, Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd., said last week.

On Tuesday, the benchmark equity indices opened lower after three consecutive sessions of gains, as shares of HDFC Bank Ltd. dragged.

As of 10:06 a.m., the NSE Nifty 50 was down 20.15 points, or 0.09% at 22,481.85 and the S&P BSE Sensex was down 130 points, or 0.18% at 73,875.