India Vix down nearly 10% in 2 sessions ahead of RBI MPC meet outcome

India Vix down nearly 10% in 2 sessions ahead of RBI MPC outcome.

The India VIX, a key gauge of market volatility, declined nearly 10 percent over the last two sessions as investors await the outcome of the Reserve Bank of India’s monetary policy committee (MPC) meeting scheduled for June 6.

The volatility index, often referred to as the market’s fear gauge, has been fluctuating sharply between 15 and 23 levels since April. Analysts attribute this trend to concerns around global trade tensions, potential US tariffs, and geopolitical developments.

However, market participants noted that volatility has cooled over the past week, with the VIX inching towards the lower end of its recent range.

"The index has been easing due to some stability on the global front and the lack of any major domestic triggers. But any negative surprise from the policy or global front could lead to a spike in volatility. Investors should remain cautious and track global cues closely," said Ajit Mishra, Senior Vice President, Religare Broking.

In Wednesday’s session, market breadth remained positive with 1,859 stocks advancing, 1,557 declining, and 122 remaining unchanged on the BSE.

The MPC began its three-day meeting on Wednesday and will announce its decision on Friday. According to a poll conducted by Moneycontrol, most economists and treasury heads expect a 25 basis points cut in the benchmark repo rate.

The expectation of a rate cut is being driven by the continued softening of inflation. The Consumer Price Index (CPI) has remained below the central bank’s medium-term target of 4 percent for the past three months, giving policymakers some room to support growth.

MPC Poll | RBI likely to cut repo rate by 25 bps in June policy

Prashasta Seth – CEO, Prudent Investment Managers, added "The recent 10% decline in India VIX reflects growing investor confidence and expectations of policy continuity from the RBI in the upcoming MPC meeting. With inflation trending within the central bank’s comfort zone and growth showing resilience, markets appear to be anticipating a balanced and data-driven approach from policymakers."

"This reduction in volatility is encouraging, but it’s important for investors to remain grounded in fundamentals. Rather than chasing short-term sentiment, we believe in focusing on long-term asset allocation strategies, backed by thorough research and prudent risk management. Lower volatility often presents opportunities to selectively increase exposure to quality businesses across sectors. The current environment underscores the value of staying disciplined and invested through market cycles, while aligning portfolios with evolving macroeconomic realities and individual financial goals," he added.

Meanwhile, in a boost to sentiment, NITI Aayog CEO B V R Subrahmanyam  said India has overtaken Japan to become the fourth-largest economy in the world, with its gross domestic product (GDP) reaching USD 4 trillion. He added that the country's macroeconomic indicators remain healthy and the global environment is becoming more favourable for India.

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