VIX and volatility move in the opposite direction. A higher VIX indicates higher volatility in the market, vis-a-vis a lower VIX, which means low volatility in NIFTY.
Let’s understand with an example. Suppose, VIX value is 15. It means investors expect prices to fluctuate in the range of +15 and -15 in the next thirty days. Theoretically, VIX oscillates between 15 and 35. Any value around or below 15 represents low volatility against values higher than 35, which indicate high fluctuations in the market. In the past, NIFTY and VIX had shared a negative relationship, meaning NIFTY rose each time VIX was below 15. India VIX in the stock market represents whether investors are feeling fearful or complacent in the short term, an indication of market choppiness.
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