The India VIX, often referred to as the market's fear gauge, crossed the 15 mark on Tuesday, its highest level in the last six months, signalling a rise in near-term volatility expectations.
Unlike the Nifty 50 or the Sensex, which track stock price movements, the India VIX measures the cost of hedging market risk. It is derived from the order book of Nifty options, based on the bid and ask prices of out-of-the-money (OTM) contracts. When traders anticipate sharp market moves, demand for options rises, pushing the VIX higher. Conversely, a low VIX typically reflects market calm and investor complacency.
The recent uptick follows a prolonged period of subdued volatility. The India VIX had fallen to a record low of 9.5 about a month ago and had been hovering around the 10 level for most of the past month, close to its all-time low.
Typically, an India VIX in the 9–12 range indicates low fear and limited volatility being priced into trades. Analysts said the extended period of low readings had reassured bullish sentiment, reflecting expectations of market stability and the absence of immediate macroeconomic or domestic triggers.
With no major event risk being priced in for the next 30 days, traders had remained comfortable maintaining exposure within a narrow range. The move above 15 now suggests a shift in risk perception, with market participants beginning to price in higher uncertainty in the near term.
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