The volatility gauge managed to recover from the sharp decline of 15 percent seen in the India VIX index earlier in trade today.

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The index hit a level of 18.5550 points which is the highest since May 28, 2021. At 11:46 am, the index was up 2.4 percent higher at 18.4825 points.

The highly volatile movement in the India VIX index indicates the anxiety among investors given the ongoing rally in equities, analysts said.

With the market continuously scaling fresh peaks, some caution has crept in. Nifty50 has gained 27.5 percent Year To Date (YTD) and Sensex surged 25 percent YTD.

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The India VIX index has begun climbing higher which warrants caution, said Arpan Shah, Senior Research Analyst at Monarch Networth Capital.

The index had stayed below the 16-point level until last week. The index closed above this important level last week and has now crossed the crucial level of 18 points. This means the fear gauge is inching towards more dangerous waters, added Shah.

The index jumped 12 percent in the past one week, and close to 38 percent in the past three months whereas YTD, the index has slumped 12 percent. This movement is reflective of the high volatility in the market.

Higher levels of 20-21 points could also be on the card for India VIX, which indicates heightened profitability. This would mean, we could see a sideways or choppy movement in the headline indices but stock-specific reactions are highly likely, said Swapneel Mantri, technical analyst (institutional desk) at Sushil Finance.

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