Markets relax, but stress may be around the corner

Fear gauge declines, but volatility can resurface if retaliatory tariffs take effect

- Dipti Sharma & Srushti Vaidya

Markets are back in calm waters, with the benchmark Nifty 50 rising nearly 4% in the month to date. However, an undercurrent has already started forming.

Volatility could resurface soon, as US President Donald Trump hasn't shown any signs of extending his 90-day pause on reciprocal tariffs beyond July 9.

"Traders may start reacting as early as Friday, with increased activity in the Vix," said Shrikant Chouhan, head of equity research at stockbroker Kotak Securities.

"Unless there is a delay or reversal in the tariff decision, volatility could spike, potentially reaching levels around 19-20," he added.

The tariff pause had given markets around the world a chance to breathe easy.

In fact, India's Volatility Index (Vix)—fear gauge—declined from a high of 22.79 on April 7, the month when Trump first announced reciprocal tariffs, to around 12.44 on Thursday.

Fear seems to have taken the back seat, with investors showing little concern over near-term uncertainties.

According to market experts, most potential shocks, from geopolitical tensions and tariff worries to central bank decisions and major policy or election events, appear to be priced in.