Stock Market Crash: 'Fear Index' India Vix Soars Over 15% - What Is It Really?

The stock market tumbled today, with the BSE Sensex falling by 1,258.12 points and the Nifty 50 falling by 388.70 points. Following the unexpected market crash, the India Vix - Fear Index rose by 15 per cent.
The India VIX is popularly known as the 'Fear Index' that reflects the volatility in the Indian stock market. The higher value of VIX implies that uncertainty in the market has increased with a high potential for huge price swings.

Stock Market Crash: Rise In India VIX

On January 6, VIX rose by 15 per cent as Nifty and Sensex crashed. The rise in India Vix comes after gaining 18 per cent the previous week. VIX had jumped by 7 per cent to a two-week high of above 15 in early September, indicating more uncertainty in the market. Traditionally, the VIX has moved up ahead of major events like general elections. For example, in 2019, it surged 150 per cent (from 12 to 30), and in 2014, it jumped 212 per cent (from 12.5 to 39).

Stock Market Crash: Implications for Investors

The rising India VIX indicates more market volatility and nervousness of investors. The investors should expect market fluctuations and adjust their portfolio accordingly. However, the situation is observed because of several reasons currently dominating the landscape. 

India VIX Understanding

The India VIX is calculated from the order book of the underlying index options and represents the market's expectation of volatility over the next 30 calendar days. The higher the value of VIX, the more is the expected volatility; the lower, the less volatile the market conditions.

The Volatility Index (VIX) indicates how much that market expects prices to jump around in the near term. Volatility, in finance, means the rate and size of price changes, or risk. The VIX measures this expected movement (as a percentage, for example 20%) based on option prices.

Stock Market Today

On January 6, 2025, the Indian stock markets saw a major decline. The BSE Sensex fell by 1,258.12 points (1.59 per cent) to conclude at 77,964.99, while the Nifty 50 dropped by 388.70 points (1.62 per cent) to end at 23,616.05.

The recent surge in the India VIX highlights growing concerns about market volatility. Investors should stay informed and consider strategies to mitigate potential risks in this uncertain environment.