India VIX hits 6-month high: More stock market decline ahead?
What's the story
India's Volatility Index (VIX), popularly known as the 'fear index,' has hit a six-month high of 17.3, reflecting a bearish sentiment among investors.
The spike comes after four consecutive sessions of rise, with nearly 20% increase since the beginning of the year.
Market experts noted that the India VIX has been oscillating between 12 and 17 since August last year, indicating heightened nervousness about the Nifty outlook for the next month.
Investor anxiety
Market volatility linked to global trade uncertainties
Akshay Chinchalkar, Head of Research at Axis Securities, thinks this market nervousness could be due to uncertainties over President Trump's tariff-related announcements.
He said, "most market participants were expecting tariffs on Chinese exports to the US to be announced immediately, but the fact that didn't happen on day one of his presidency has made Chinese stocks gain the most in Asia today."
This has led to a risk-on to risk-off sentiment shift during early trading hours.
Market forecast
Technical analysis predicts continued bearish market trend
Chinchalkar also gave a technical analysis of the current market situation. He said unless Nifty 50 crosses 23,472, bears will remain in control.
The daily chart shows an attempt to recover through a Bearish Flag formation, which could trigger a fall to around 22,800 in the near term.
This prediction fits with the rising India VIX and its implications for increased market volatility.
Market correlation
Rising VIX signals potential market downturn
Chandan Taparia, Head of Derivatives & Technicals at Motilal Oswal Financial Services, emphasized an 85% correlation between VIX and market movements.
He noted that a rising VIX indicates market bounces are being sold off as it tends to be a contrarian indicator.
Further, he cautioned that increased volatility is likely in the markets with India VIX's rise to 17 signaling heightened volatility and potential downside risks.
Market performance
Benchmark indices Sensex and Nifty 50 experience decline
So far in 2025, the benchmark indices Sensex and Nifty 50 have declined by 2.2% and 1.9%, respectively.
Broader market indices such as BSE Mid and Smallcaps have also lost over 6.4% and 5.6%, respectively.
Going forward, experts expect VIX levels to rise further toward the 18-21 range, suggesting that market volatility could continue to rise due to the upcoming Union Budget and global trade uncertainties.