India’s market volatility indicator, the India VIX, has declined sharply in recent months, touching a two-year low on Dec 22, 2025 as equity markets showed signs of stability.
The index, which measures expected short-term market fluctuations, has dropped over 33% so far in 2025.
The easing volatility suggests improving investor confidence supported by domestic market strength, foreign investment flows and favourable global trends.
From the start of 2025, the index has registered a decline of around 33%. Historically, India VIX had reached a low of 8.18 in 2023 and an all-time low of 2.13 in February 2016 following an unusual market event.
India VIX represents the market’s expectation of near-term volatility and is commonly associated with perceived risk levels.
It reflects the expected annualised volatility of the underlying index and indicates how much prices may fluctuate over the next 30 days.
The index is calculated using NIFTY option prices and follows a methodology adapted from the CBOE framework, incorporating bid-ask data and interpolation techniques to capture expected market movements.
Foreign portfolio investors have returned to the Indian equity market after an extended selling phase. Since mid-December 2025, overseas investors have resumed net buying activity.
Recent exchange data shows that both foreign and domestic institutional investors have made net equity purchases, providing additional support to market sentiment.
As per news reports, lower VIX levels also hint at a market environment where participants perceive limited near-term risk.
The subdued readings suggest that traders are not positioning for sharp price swings and are largely expecting markets to remain range-bound.
This indicates that investors are not factoring in any immediate event-driven risks, pointing to a phase of cautious waiting rather than strong directional conviction.
The recent decline in India VIX reflects reduced expectations of near-term market volatility. Factors such as stable equity performance, renewed foreign investor participation and supportive global cues have contributed to this trend.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Dec 22, 2025, 3:50 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
Know MoreWe're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
