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Highlights
- Securities and Exchange Board of IndiaChairman Tuhin Kanta Pandeysays market volatility during geopolitical tensions is temporary.
- Fear gauge India VIXhas surged 124% in three months amid global uncertainty.
- Benchmark indices Nifty 50and BSE Sensexdeclined sharply as Iran–Israel tensions rattled markets.
Speaking at an event organised by Moneycontrol on Saturday, Pandey said past global crises have demonstrated that periods of extreme market volatility eventually subside and stability returns. He noted that the real strength of financial markets lies not in avoiding volatility but in their ability to function smoothly, fairly, and efficiently during uncertain times.
Pandey pointed out that geopolitical tensions continue to reshape economic relationships across the world. The conflict in the Middle East has disrupted energy supply chains and caused fluctuations in global oil and gas markets, leading to heightened nervousness among investors.
However, he said similar disruptions in the past — including the COVID-19 pandemic and the Russia–Ukraine war — also triggered market turbulence, yet markets eventually regained stability.
“The real test of a market is not whether volatility appears, but whether the system continues to function smoothly, fairly and efficiently when it does,” he said while speaking on the theme ‘Making Capital Markets More Efficient in Uncertain Times’.
Meanwhile, investor anxiety has been visible in the surge of the market’s fear gauge, the India VIX. The volatility index has jumped about 124 per cent over the past three months and was hovering around the 22.65 mark. It rose more than five per cent on Friday as equity markets witnessed heavy selling.
Indian benchmark indices also came under sharp pressure, marking their third consecutive day of decline as geopolitical tensions weighed on market sentiment. Metal, automobile and financial stocks were among the biggest drags on the market.
Pandey emphasised that efficient capital markets play a stabilising role during uncertain times. They help ensure transparent price discovery and absorb shocks without destabilising the broader financial system.
He added that investor confidence ultimately depends on the efficiency and credibility of the financial system. Without trust, capital flows slow down, investments weaken, and sustaining economic growth becomes more challenging.
The SEBI chief also highlighted that the global economy is navigating a period of significant transformation, driven by rapid technological developments such as artificial intelligence, which are adding new layers of uncertainty to financial markets.
