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News Topical, Digital Desk : Uncertainty has increased in the market over the past few days, and this is having a direct impact on the India VIX. On December 8, 2025, the volatility index jumped by around 7–8% to around 11.1, after remaining below 10 for the past several months. The decline in the Nifty and Sensex and global market pressure have created mild fear among investors. Although the level is still considered historically low, the signal for traders is clear: volatility may increase in the short term. The reason is clear: investors are cautious ahead of the US Federal Reserve's rate decision on Wednesday. Furthermore, there have been indications that the US may impose new tariffs on rice imported from India, further weakening market sentiment. Traders fear this could impact India-US trade talks.
Why is the India VIX rising?
The India VIX essentially predicts volatility over the next 30 days based on premiums on Nifty options. As demand for protection through put/call options increases, premiums also rise, causing the VIX to rise. This is what happened recently.
Global markets were under pressure, and Indian indices like the Nifty, Sensex, and Mid-Smallcap Index declined. In this environment, investors immediately resorted to hedging—that is, trying to reduce risk through options. This increased hedging pushed the VIX sharply higher.
Normally, when the market is calm, the VIX falls below 10. This pattern has been the case for the past few months. However, as soon as the market experiences a sharp decline or uptrend, the VIX also rises. This was repeated this time too.
Has fear really increased?
If the VIX were 20–25 or above, it would be considered 'extreme fear'. The current level around 11 indicates that the situation is under control. Yes, there has been some increased anxiety, but this is a normal short-term sentiment shift. This can be called a "low to moderate volatility zone." What it means for traders: When the VIX rises, option premiums become expensive. Simply buying options can be costly. Professional traders often employ selling or spread strategies when the VIX is high. However, these strategies are risky—so use them with full understanding.
A warning for investors: The market could experience some short-term shocks. Keep leverage low, meaning avoid excessive trades using borrowed funds. Maintain a balanced portfolio—asset allocation is crucial. Use stop-losses to limit losses in case of a sudden drop.
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