India VIX plunged nearly 18% on May 12, marking its sharpest single-day fall since April 15. The drop comes amid easing border tensions between India and Pakistan following a joint ceasefire announcement, along with optimism around progress in global trade talks, triggering a broad market rally across sectors.
Over the weekend, a series of developments significantly impacted Indian stock markets, leading to a sharp rally and a noticeable drop in market volatility. As of 11:15 AM on May 12, 2025, the India VIX—India’s benchmark volatility index—fell nearly 18%, slipping below the 18 mark.
This marks the sharpest single-day drop in the India VIX since April 15, 2025, when it had declined by nearly 20%. With Monday’s sharp fall, the India VIX has turned negative on a month-to-date basis.
It’s worth noting that on May 8, the India VIX had surged over 10% following reports of rising tensions between India and Pakistan. The index had been trending higher since the Pahalgam attack, climbing steadily—except for a brief pause on April 28—until May 9.
The primary reason behind this decline in volatility appears to be the easing of geopolitical tensions. On Saturday evening, India and Pakistan jointly announced a ceasefire. While reports of a brief violation followed shortly after, no further incidents have been reported since.
Adding to the positive sentiment, international reports suggest there has been ‘substantial progress’ on trade negotiations between two major global economies, which has further buoyed investor confidence.
As a result, both the Sensex and Nifty surged nearly 3%, with Nifty Bank rising over 3%. The broad-based rally reflected a risk-on sentiment across Dalal Street, with all major sectoral indices trading in the green—except Nifty Pharma, which was marginally down. Nifty Realty and Nifty IT led the gains, climbing 4.35% and 3.97%, respectively.
Broader market participation was strong as well. The Nifty Midcap 100 and Small-cap 100 indices advanced 3.29% and 3.75%, respectively, outperforming the frontline benchmarks.
Disclaimer: The article is for informational purposes only and not investment advice.
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