Earlier this week, a measure often viewed as a gauge of fear in stocks hit its lowest level in more than 14 months, suggesting investors are growing more confident about positive returns in the coming months.

India’s VIX index, maintained by the National Stock Exchange, hit a 14-month low of 12.55 on November 14, the lowest level since September 21, data provided by the NSE showed. The index is calculated by looking at the price movement of Nifty50 index options contracts. According to the NSE, the index measures expected market volatility for the next 30 calendar days.

The volatility gauge has fallen 83% from an all-time high of 86.63 on March 24, 2020, which also marked the bottom of the Covid-19-related rout in global stock markets. India’s VIX is down 12% after falling 22% this year.

The index has fallen below 15 points in recent history, which usually points to a sharp stock decline in the coming months. In 2021, the volatility gauge fell below 15 in June and had remained slightly above that level since the Covid-19 rebound peaked in October.

With the benchmark stock index plunging more than 15% from October 2022 to June 2022, the bear market territory is all but likely. The broader market index has not been as lucky as the Nifty Midcap 100 and Nifty Smallcap 100, which have plunged more than 25% from their all-time highs.

Likewise, the VIX remained below 15 throughout February 2020, as global markets assumed that the damage from Covid-19 infections would be largely confined to China.

As the pandemic spread to the rest of the world in March 2020, the domestic benchmark plummeted 30% from its record high in February 2020 on fears of an imminent lockdown in India.

Before the pandemic, rapid falls in the VIX also tended to indicate that investors were buying fewer put options in the derivatives market, as they were less concerned about a sharp market drop.

As India heads into 2023, investors are banking on better economic growth in India than elsewhere to help its domestic market outperform countries like China, the US and Europe.

While India has outperformed its global peers regarding economic and stock returns, some sceptics have begun to emerge, warning of high valuations and signs of slowing earnings growth.