India VIX Spikes Over 11 Per Cent In 2 Days - What's Behind The Surge In Investor Fear

The domestic equity market has lately been moving sideways in a flip-flop fashion, signalling weakness in investor confidence. India VIX, an indicator of investor anxiety, accordingly, spiked over 11 per cent over the past two days to surpass the 19-mark, before settling at   as of May 27.

India VIX measures the market’s expectations of volatility over the short term, typically the next 30 days. A higher VIX signals that traders expect more volatility, while a lower VIX indicates expectations of stable or calm market movement.

Meanwhile, the benchmark indices ended a highly volatile session on a negative note today. The Sensex corrected 624.82 points or 0.76 per cent to end at 81,551.63, while the Nifty 50 declined 174.95 points or 0.70 per cent to settle at 24,826.20.

However, the broader market indices managed to stay afloat in the green, with the Nifty Midcap 100 and Nifty Smallcap 100 closing higher by 0.15 per cent and 0.10 per cent, respectively.

Rupak De, Senior Technical Analyst at LKP Securities, said Nifty 50's sideways movement over the past 10 to 11 sessions suggests a lack of clear direction among investors.

Ajit Mishra, SVP of Research at Religare Broking, told Outlook Money that the market is currently witnessing a tug of war between bulls and bears amid mixed global cues. He said, “We are seeing mixed signals from the global front, especially from the United States (US), which is keeping the participants on the edge, in the absence of any major domestic trigger.”

Adding further he said, “At one end, favorable updates on possible trade deals between the US and other nations have eased the looming concern of slowdown in the global economy. On the other hand, the rising US bond yields and proposed US tax bill has raised the concern of higher inflation and further dent to the fiscal deficit which could derail the rate cut cycle by the Fed.”

US President Donald Trump, on April 2, had announced sweeping reciprocal tariffs on major economies. On India, he had imposed a 26 per cent tariff. However, a week later, on April 9, the Trump administration temporarily paused its enforcement, giving its trading partners a window to negotiate terms.

In recent weeks, the US has successfully concluded trade agreements with countries like China and the United Kingdom.

India is also looking to join that list. Last week, Commerce Minister Piyush Goyal had led high-level discussions with his US peer Howard Lutnick in Washington. Now, American officials are expected to visit India soon to finalise the first phase of a proposed trade deal.