The present research paper main objective is that the study of Measurement of the Financial Risk and Mispricing of Volatility in the present scenario in the Indian equity. Money and debt market while the traditional theory explored in the present situation that high returns of money are associated with high risks, The market appears to be underestimating the probability of market movements in either direction, and thereby underpricing volatility severely in the research paper shows in that under certain conditions, a portfolio with low volatility stocks can yield higher returns than a high-volatility portfolio. Market operation is unacceptable in any financial market even if this influence is performed by the state itself. Moreover market operation to reduce interest rates would reintroduce financial repression through the back door and would reverse the principal success of the financial sector reforms. The main agenda of this research paper is the relatively new phenomenon of 'Risk-based anomaly. The present study mainly using a low-volatility portfolio strategy over a 6- year period (from 2010 to 2016) with rolling monthly iterations in the Indian money market, The present Research Paper main proposes a substitute design for the government securities market and also a new monitoring construction. Integrated markets, unbiased access to all modules of investors, intense competition and investor safety are the key elements of the anticipated design. The research study has focused on financial market volatility mispricing and measurement of the financial risk in Indian money market have wide scale repercussion on the economy as a whole. Hence there is a necessity to understand time path and nature of volatility of stock returns. In this study, an attempt has been made to analyze the behavior of volatility in the Bombay Stock Exchange Index shares and other share capital market in India. The nature of volatility persistence, its possible relationship with foreign institutional investment and the flow of unexpected news have been examined in this study.