In the current calendar year, the India VIX index has jumped fivefold, from around 12 levels to the current 67 levels, which clearly hints that the market perceives that volatility will only increase in the coming days.
India VIX is an index that serves as a measure of market expectation of volatility in the near term.
While volatility signifies the rate and magnitude of change in the stock price or index value, the movement in the VIX index reflects the overall market volatility expectations over the next 30 days.
So, a spike in the VIX value means the market is expecting higher volatility in the near future.
Given the nature of the index, it is also known as ‘fear gauge’ or ‘fear index’.
Important Info :
India VIX index is not the first of its kind in the world.
The VIX index was first created by the Chicago Board Options Exchange (CBOE) and introduced in 1993 based on the prices of S&P 500 index.
The India VIX was launched in 2010 and is based on the computation methodology of CBOE though amended to align with the Indian markets.
Source : The Hindu