India VIX defies trend – The HinduBusinessLine

India VIX rose 10.7 per cent on Sunday, marking the first instance in the last ten years, that the volatility index has climbed on a Budget Day (including two interim budgets). It touched an eight-month high of 16.11 before settling at 15.10.

While the index has been trending higher since the beginning of the year, the Budget announcement, particularly the increase in Securities Transaction Tax (STT), triggered the sharpest intraday jump since November 21 last year.

Fear gauge

India VIX is computed using the order book of near-term and next-term Nifty options. It derives expected volatility by factoring in the weighted prices of out-of-the-money (OTM) call and put options across multiple strike prices. In simple terms, it captures the market’s expectation of volatility over the next 30 days, expressed in annualised percentage terms.

So, a rising India VIX shows higher participation in OTM options, which can also indicate that investors are expecting higher than usual price swings.

What it means?

Often referred to as a fear gauge, India VIX reflects the prevailing market sentiment. Persistent uncertainties around geopolitics and continued capital outflows have been weighing on domestic equities, keeping investors on edge.

The latest spike suggests that concerns over market performance have not fully dissipated. Participants, therefore, need to exercise caution. This is clearly not the phase to go all-in, even though selective opportunities may exist at the individual stock level.

The chart also indicates that India VIX has room to move higher, possibly to 20. The chart shows that it has largely remained within 10 and 20 since June 2024.

A rising VIX is typically associated with market weakness, and investors should be prepared for further downside before the market potentially stabilises and stages a recovery.

Published on February 1, 2026