North Korea-US tension sends India's VIX soaring

Geopolitical tensions caused by North Korea has put global markets on boil. While Japanese yen continues to fall, India's volatility Index (VIX) has touched its biggest yearly gain. 

Volatility Index is a measure of market’s expectation of volatility over the near term.

According to IIFL Holdings, "Uncertainty of reaction to North Korean provocation is dragging on Indian stocks and pushing volatility off from a state of complacency."

Sanjiv Bhasin, executive vice president at IIFL, was quoted by Bloomberg in a report saying, "Stocks facing reality after climbing global wall of worries. Investors will await cues from U.S. markets open and global funds reaction."

Considering if Nifty falls, Bhasin said, "If Nifty breaks 9,700, it can fall to 9,400 as economy remains weak and there is too much complacency even with weak earnings."

Moreover, as per a seperate Bloomberg report, Hans Goetti, Independent Research Consultant, said that North Korean-US tension may be beneficial for emerging markets because of weaker dollar and strong growth. 

Asian indices opened weak after North Korea tested another missile over the weekend. This saw gold prices hit fresh new highs for the year and Japanese ‘Yen’ get stronger as money chased safety. With US markets closed today for ‘Labor Day’ expect European indices to dictate the way forward as S&P futures trade weak.