Why India's super-low VIX is a big deal
India's Volatility Index (VIX) just dropped to an all-time low of 10.12 as of September 12, 2024, showing that the market is unusually calm right now.
Analysts attribute this calm partly to domestic institutional investors cushioning foreign institutional investor selloff, keeping the Nifty steady near 25,000.
Low VIX means options are cheaper to trade
A super-low VIX means investors aren't feeling much fear and options are cheaper to trade.
Historically, when VIX has been this low, Nifty has gone on to deliver solid returns—about 10% in six months and nearly 17% in a year.
So if you're thinking long-term, this could be a good sign.
A sudden shock could shake things up fast
The recent VIX drop comes as risks like slower earnings growth and US-India trade tariffs have already been factored in.
There's a long-term pattern here: VIX usually rises when markets fall and drops when they rally.
While things look stable now, just remember—a sudden shock could shake things up fast.