The curious case of the India Volatility Index

The India VIX has slipped 12.5 percent from the beginning of January and so has the benchmark index, shows a Forbes India analysis. In tandem, the Nifty also has lost nearly two percent in this year so far. Typically, the VIX and boarder indices have an inverse relation, especially in times of uncertainty-led panic sell-off in equities by investors. India VIX usually rises when there is panic or uncertainty in the market. However, in the last six months, despite the market falling significantly, VIX has remained low.

This suggests that the correction has been more of a systematic and gradual decline rather than a sudden panic-driven sell-off,” says Somil Mehta, head---alternate research, capital market strategy, Mirae Asset Sharekhan.

Mehta explains that a low India VIX means that market participants are not expecting extreme volatility in the near term. It indicates that traders and investors believe the correction is more of a normal market cycle rather than a sign of deep financial distress. “Despite sectoral selloffs, the broader sentiment remains stable, suggesting confidence that markets will recover rather than crash further,” he adds.