India VIX Drops Below 13 as FII Outflows Meet Strong Domestic Buying

The India VIX, a key gauge of market volatility, eased to ₹12.66, reflecting a significant decline of 9.76%. This drop in the volatility index signals a notable reduction in near-term market fear and uncertainty among participants. Accompanying this shift, the Nifty Put-Call Ratio for the July 28 expiry stood at approximately 1.13, pointing toward a balanced market sentiment that avoids extreme bullish or bearish biases.

Underlying market mechanics reveal a persistent tug-of-war between foreign and domestic institutional investors. Provisional data shows Foreign Institutional Investors remained net sellers, offloading shares worth approximately ₹3,892.77 crore. However, this foreign capital flight was countered by Domestic Institutional Investors, who injected approximately ₹5,453.55 crore into domestic equities, cushioning the broader market against sustained outflows.

Macroeconomic indicators also showed supportive trends as the yield on India's 10-year government bond eased to approximately 6.77%, down about 0.05 percentage points. This yield compression was largely driven by a decline in international crude oil prices, which alleviated domestic inflation concerns while the Reserve Bank of India maintains its repo rate at 5.25%.