The India Volatility Index shot up to a three-year high of 24.05 on Monday, amid rising uncertainty over the new government formation and soaring crude oil prices.
The India VIX, the fear gauge for domestic equities, rose 5.76 per cent to settle at 24.05, after an intra-day high of 24.56.
"Crude and election uncertainties is pushing the India VIX up," IIFL co-promoter and MD R Venkataraman told PTI.
Besides the ongoing Lok Sabha elections, market sentiment was hit as macroeconomic worries resurfaced, following reports that the US will end sanctions waiver on Iranian oil imports, analysts said.
Global benchmark Brent crude climbed to a multi-month high of USD 73.81 per barrel, a 2.56 per cent rise.
"The Nifty and Bank Nifty index has witnessed profit booking in the last couple of sessions, and a rise in the volatility index could lead to some roller coaster activity in the short term," said Ruchit Jain, an analyst with Angel Broking.
On April 22, 2016, the volatility index reading was 16.38, while in the same period of 2017 and 2018, it was between 12 and 14.