India’s stock market has maintained its calm recently as the Volatility Index or VIX has fallen to a 15 month low. This means that recent market stability, lower volatility in the US, and reduced trading in derivatives have calmed investor nerves and made the overall market feel less risky.The India VIX remained flat on Thursday, closing at 11.2. Meanwhile, the benchmark Nifty 50 index dipped 100.60 points, or 0.40%, to end the session at 25,111.“Indian markets are currently mirroring the US VIX, which is at a 7-8 month low, offering some relief to traders globally,” Ajit Mishra, senior vice-president, research, Religare Broking told ET.The firm noted that with few domestic triggers and most of the earnings season already factored in, the index continues to stay muted.Since the beginning of July, the Nifty has been trading within a narrow 25,000–25,500 range, failing to break out in the absence of meaningful catalysts.How does India VIX work?India VIX measures the expected volatility in the stock market over the next 30 days, based on Nifty options prices. It rises when markets are predicted to undergo sharp movements and drops during calmer, more stable periods.In the past month, the India VIX has declined by nearly 22%, even as the Nifty 50 has edged up by around 1%. Similarly, the CBOE Volatility Index (VIX), which measures market volatility in the US based on S&P 500 index options, dropped 19.7% over the same period.The subdued India VIX may also be partly due to lower participation in the options market. “At first glance, this may seem like a sign of market confidence, but the reality points to suppressed hedging activity and reduced participation,” Dhupesh Dhameja, derivatives analyst at Samco Securities was quoted as saying.He highlighted that traders have largely avoided buying deep out-of-the-money put options, which has kept premiums low and suppressed implied volatility.Dhameja further added that a dip in activity from major global liquidity providers like Jane Street has resulted in lower trading volumes in derivatives and less depth in the options market, particularly in far out-of-the-money contracts, which usually indicate broader economic risk sentiment.While the India VIX is a useful tool for gauging sentiment, it tracks only the Nifty 50 and its large-cap constituents, and may not capture broader market dynamics.“The market appears calm on surface, but history suggests that such low-volatility phases are often followed by sharp directional moves,” Dhameja cautioned. He added that while the trend may remain range-bound for now, any sudden spike in the VIX “signal worth watching closely.”