India stocks fear gauge spikes 11% amid market recovery

India's stock market volatility gauge surged by nearly 11% on Monday as benchmark indices erased this year's losses, following their strongest weekly performance in over four years.

 

India VIX, the measure of market volatility in the domestic market, jumped as much as 10.95 per cent to 13.9, the biggest intraday jump since January 6 this year, according to Bloomberg data. However, the index was on a downtrend since January's second half, even as markets kept falling amid foreign outflows. 

 

Domestic stocks saw some volatility subside as the index was seen quoting at 7.1 per cent higher at 13.4 apiece, amid a 1.24 per cent advance in Nifty 50 as of 12:20 PM. The index has fallen 6.5 per cent this year so far while the Nifty has erased all losses it faced in 2025. 

 

 

India VIX measures the market's expectation of future volatility based on the Nifty50 index options contracts. It typically indicates an increase in market volatility and suggests that investors are expecting higher uncertainty or risk in the near future.  The surge in volatility comes ahead of the April 2 deadline for US President Donald Trump's reciprocal tariffs to take effect. However, according to a Bloomberg report, tariff actions are set to be more focused than what was previously suggested.  

 

Post the surge in the broader markets last week, India VIX had corrected to a multi-month low of 11-12, according to Ruchit Jain, head of equity technical research and wealth management at Motilal Oswal Financial Services. "The VIX has seen pull back just because we are approaching the event of US Tariff deadline of April 2." However, not much impact of the same is seen in markets as strong buying interest is seen since last week, he said. 

 

The BSE Sensex jumped nearly 900 points to hit an intraday high of Rs 77,843.84 and the NSE Nifty gained 280 points to hit an intraday high of 23,638.40. Last week, India's Nifty 50 rose by 4.26 per cent or 953.2 points to 23,350.4 while the 30-stock Sensex gained 4.17 per cent or 3,076 points to the 76,905 level, registering the biggest weekly rally for the key gauges since February 2021. 

 

Global funds that were on record exodus this year have turned net buyers in the cash market during three sessions last week. On Tuesday, FIIs bought stocks worth ₹1,462 crore and on Thursday they mopped up stocks worth ₹3,239 crore. On Friday, they bought stocks worth ₹7,470.3 crore mainly triggered by MSCI rejig adjustments. Despite this buying activity, global funds have net sold ₹1.4 trillion in 2025 so far. 

 

Improving macros of the Indian economy and fair valuations have turned FIIs from sellers to buyers, according to V K Vijayakumar, Chief Investment Strategist, Geojit Investment Services. This has triggered massive short covering leading to sharp spikes in prices, he said. "Even though the undertone of the market is bullish investors have to be careful."