Silver-linked exchange-traded funds (ETFs) witnessed a sharp sell-off on Monday, February 2, even as global silver prices showed only limited weakness, highlighting a strong divergence between international bullion markets and Indian-listed instruments.
The ICICI Prudential Silver ETF plunged over 17%, while Nippon India Silver ETF and Zerodha Silver ETF declined nearly 12% each during early trade. The sharp correction came despite COMEX silver trading near $78 per ounce, down less than 1% on the day.
The steep fall in Indian silver ETFs is largely a catch-up move to last week’s historic global volatility. Silver prices had suffered an unprecedented 26% intraday crash on Friday on COMEX, followed by violent swings, but Indian ETFs could not fully reflect that move immediately due to market timing, liquidity conditions and settlement mechanics. Monday’s decline represents a delayed net asset value (NAV) realignment.
Further pressure emerged from margin hikes and forced liquidation after last week’s extreme volatility. Higher margins across commodity derivatives triggered selling by leveraged participants, spilling over into ETF redemptions. At the same time, India-specific silver premiums, which had risen sharply during the rally, began unwinding, amplifying losses in domestic products relative to global prices.
Market participants also pointed to liquidity stress in ETF order books, where sudden redemption pressure led to wider bid-ask spreads and sharper price gaps. While global silver prices stabilised after the initial crash, Indian ETFs remained vulnerable to technical adjustments.
Despite the near-term correction, analysts note that the sell-off is technical rather than fundamental, driven by profit booking, premium compression and volatility-linked positioning changes. Silver ETFs are expected to remain volatile until global prices stabilise and domestic premiums normalise.
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