India VIX: The risk-o-meter and what's in store for the markets next

The VIX takes these bets and crunches the numbers to tell us what investors think will happen next.

India VIX is like a weather forecast for the stock market. It measures how much the prices of stocks are expected to swing up and down in the near future. Think of it as a "risk-o-meter." If the VIX is high, it means the market is expected to be wild and unpredictable. If its low, things are expected to be calm and steady.

The VIX is figured out from the prices people are willing to pay for options on the Nifty, a group of important Indian stocks. These options are like special bets on how much the Nifty's prices will change. The VIX takes these bets and crunches the numbers to tell us what investors think will happen next.

History shows that when the VIX is low, the market can suddenly turn topsy-turvy. Just like how calm seas sometimes come before a storm. Remember in March 2020 when the VIX hit a crazy high of 86.63? That was during a time of huge market turmoil.

When the VIX is low, it might mean people are getting too comfy, assuming things will stay the same. But the market loves surprises. So, when the VIX is snoozing, it's often a signal that things might soon change. When it's time for the VIX to wake up and start jumping, the stock market could be in for a bumpy ride.

Right now, the VIX is napping in a lower range, which can be a sign that people are getting a bit too comfortable with the way things are. It's like a quiet calm before a potential storm. So, investors should be alert. If the VIX suddenly wakes up and starts moving higher, it could mean the market is getting ready for a correction, where prices start to drop after going up for a while.

It's a bit like having an early warning system for stock market turbulence. So, if you're in the market, keep an eye on the India VIX (sustaining above level of 13-14 would fan the flames). When it starts to rise, it might be time to batten down the hatches and be ready for some market waves. That said, as long as it stays below the above-mentioned level, things are expect to be calm and steady.

Now, by considering both the Nifty view and India VIX, you can arrive at a solid conclusion. If the India VIX rises above the 13-14 mark, it could signal a prolonged correction. Additionally, if the Nifty 50 breaks below the crucial support zone of 19,150-19,250, be prepared for potential market fluctuations.