India VIX eases nearly 5%, extends fall to over 12% in 3 days amid hopes of RBI rate cut

India VIX eases nearly 5%, extends fall to over 12% in 3 days amid hopes of RBI rate cut.

The India VIX, a key indicator of market volatility, eased further on Thursday, falling nearly 5 percent intraday to touch a low of 14.98, before recovering partially to 15.27 — still down 3.02 percent at around 1 PM.

The index has now declined more than 12 percent over the past three trading sessions, reflecting improving investor sentiment ahead of the Reserve Bank of India’s policy decision.

Market participants attributed the sustained drop in volatility to rising expectations of a rate cut by the central bank’s Monetary Policy Committee (MPC), which is set to announce its outcome on Friday at 10 AM.

"The positive momentum in the market, combined with expectations of a rate cut, is boosting confidence among investors, leading to a steady decline in the VIX," said Ruchit Jain, Vice President at Motilal Oswal Financial Services.

Equity benchmarks rallied sharply on Thursday on the back of strong global cues, anticipation of a policy easing by the RBI and renewed foreign fund inflows. The Sensex soared nearly 900 points, while the Nifty breached the crucial 24,800-mark during the session.

About 2,206 stocks advanced, 1,184 declined and 138 remained unchanged on the BSE, indicating positive breadth.

The MPC’s three-day deliberations began on Wednesday. A Moneycontrol poll suggests most economists and treasury officials expect a 25 basis points cut in the benchmark repo rate, currently at 6.50 per cent.

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

Retail inflation slowed to a near six-year low of 3.16 percent in April, creating room for the RBI to adopt a more accommodative stance. The central bank has projected inflation to average around 4 per cent in the current financial year, in line with its medium-term target.

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