Nifty panics, but India VIX stays calm: Why is D-St fear gauge not reacting anymore?
Nifty50 is down about 7% in 2025 and one would assume that this period was marked by volatility. However, it is not reflected in the India VIX. The fear gauge index, as it is often referred to, fell nearly 6% year-to-date and is hovering 13.83 levels despite a sell-off in the Indian markets.
India VIX has an inverse correlation with the markets as the index jumps when equities are falling. This is because a correction is often associated with a sense of panic and fear among investors and is not playing out the way it did historically.
During the pandemic days or global financial crisis or even in the last year election phases, India VIX spiked over 20, reflecting heightened uncertainty and fear in the market.
This is in complete contrast with the Cboe Volatility Index, which is up as much as 47% as trade war fears gripped the US markets. The S&P 500 fell about 2% this year and the tech heavy Nasdaq declined over 6%.
Analysts say unlike the Cboe VIX, India VIX is not a traded instrument. So even if one wanted to buy the VIX because he/she expects downside volatility, they cannot own it in the true sense.
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