India VIX heads for sharpest weekly fall in six months as market hits record high

India Volatility Index

The India VIX, the gauge of near-term market volatility, is on track for its biggest weekly decline in six months. The fear index has fallen for five consecutive sessions, losing more than 18 percent this week.

The VIX had touched 13.64 on November 21 before sliding steadily to 11.1, marking its sharpest weekly drop since May. The decline coincided with the Sensex and Nifty hitting record intraday highs on November 27, the first such breakout in 14 months.

A falling VIX typically signals a supportive environment for equities, backed further by the Federal Reserve and the Reserve Bank of India indicating their willingness to ease rates. But analysts warn that low volatility can also signal complacency, particularly at a time when midcap and smallcap stocks continue to lag behind their large-cap counterparts as investors gravitate toward safer, more liquid names.

“This reflects lower-than-normal risk appetite,” said Akshay Chinchalkar of Axis Securities. “Some investors may start using these suppressed VIX levels to buy cheaper downside protection.”

On Thursday, the benchmark indices briefly scaled new lifetime highs before moderating on profit-taking. The Sensex surged 446 points, or 0.52 percent, to an all-time peak of 86,055.86, crossing the 86,000 mark for the first time. The Nifty hit a record 26,310.45 before trimming gains. Both indices are currently trading marginally higher, with the Sensex at 85,830 and the Nifty at 26,235.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market backdrop is turning more constructive after a long period of subdued earnings and stretched valuations.

“Earnings growth is likely to be about 10 percent in FY26, followed by 15 to 16 percent in FY27. A favourable India–US trade deal appears close. DIIs, armed with strong inflows, are buying consistently, and weakening AI-led trades globally may push FIIs to start allocating more to India,” he noted.

Independent analyst Ajay Bagga added that the fall in India VIX reflects confidence in market direction and is mirrored in option pricing. “The markets have been consolidating for 14 months, with this year among the least volatile. Retail flows have absorbed most of the promoter and FPI selling, lending remarkable resilience to Indian equities,” he said.