India VIX sees 5-day decline, history suggests volatility ahead: Axis Securities

The India VIX has fallen for the fifth consecutive session on Friday, recording a 23% decline during this period. Despite the recent dip in volatility, a report by Akshay Chinchalkar, Head of Research at Axis Securities, highlighted that such streaks have often been followed by a rise in volatility based on historical patterns.

In the report, Chinchalkar noted that five-day VIX declines have occurred 76 times in the past decade.

“Historically, these streaks have often been followed by a rise in volatility,” he said, adding that the most recent similar streak occurred in February 2025.

According to the report, the longest VIX decline streak in the last 10 years was 8 days, while the longest run since the 2009 financial crisis was 9 days of declines.

The report attributed the recent drop in volatility to multiple factors, including progress in trade talks, with the US cutting tariffs on China to 30% from 145%, easing India-Pakistan tensions after a ceasefire announcement, robust foreign inflows into Indian equities, and the Reserve Bank of India’s supportive stance through open market operations.

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Additionally, market expectations of further policy easing have also contributed to the decline.However, the report pointed out that history suggests the drop in volatility ‘may be mature’ and that an uptick may be around the corner.Also read: Textile stocks rally up to 10% as Bangladesh port curbs likely to generate Rs 1k cr biz for domestic firms

The report also highlighted that, in the 5-day forward period after similar declines, the VIX was higher 62% of the time with an average move of +2.5%. Over a 20-day period, the probability of a higher VIX stood at 58%, with an average move of +6.9%.

Chinchalkar also emphasized that the potential for increased volatility aligns with the market’s historical behavior, stating, “Since the Great Recession of 2009, the longest run was 9 days of declines.”

The report concluded that while sentiment remains positive, market participants should stay vigilant for a possible volatility rebound based on past trends.

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