India’s equity market volatility indicator, the India VIX, witnessed a sharp decline on Tuesday after surging more than 70 percent over the past month, reflecting a partial cooling of investor anxiety as crude oil prices retreated and global risk sentiment improved.

The volatility index dropped around 14 percent to 19.99, reversing part of the steep climb that had pushed it to a 21-month high earlier. The spike in volatility over recent weeks was largely driven by escalating geopolitical tensions in West Asia, particularly the expanding US-Israeli conflict with Iran, which triggered fears of disruptions to global oil supply chains.

India VIX, often referred to as the market’s “fear gauge”, measures expected volatility in the Nifty index over the next 30 days based on options pricing. A rising VIX typically signals heightened uncertainty among traders, while a declining index suggests improving risk appetite and a stabilising outlook for equities.

The recent volatility surge coincided with crude oil prices crossing the USD 100 per barrel mark, the highest level in more than three years. Energy markets had been reacting to fears that the conflict could affect shipping routes and production flows in the Middle East, particularly around strategic supply corridors.

However, oil prices cooled on Tuesday after US President Donald Trump suggested that the conflict could reach a resolution soon. The comments eased fears of prolonged supply disruptions and triggered a broad recovery across global financial markets, including equities.

The easing in oil prices provided immediate relief to Indian markets, which remain heavily sensitive to energy costs due to the country’s high dependence on crude imports. Lower oil prices typically improve India’s macroeconomic outlook by reducing pressure on inflation, the current account deficit, and fiscal balances.

Against this backdrop, benchmark equity indices also posted gains. The BSE Sensex advanced 557.52 points, or 0.72 percent, to close at 78,123.67, while the NSE Nifty rose 179 points, or 0.74 percent, to settle at 24,207.05. The recovery indicates that investors are cautiously returning to risk assets after the recent bout of volatility.