Methodology

How Market Mood IndexX is calculated

Market Mood IndexX measures broad Indian equity market conditions on a 0-100 scale. Lower scores indicate fear, higher scores indicate greed, and the middle range indicates neutrality.

What it measures

The score combines trend, participation, volatility, price leadership and foreign institutional activity into one educational market-condition reading.

What it does not measure

It does not forecast guaranteed returns, recommend stocks, time individual trades, assess personal risk tolerance, or provide personalised investment advice.

The five components and weights

Mood Score = 25% Momentum + 25% Market Breadth + 20% Volatility + 15% Price Strength + 15% FII Activity

• Momentum, 25%: Nifty position relative to 50-day and 200-day moving averages and 14-day RSI. Higher score means stronger momentum.
• Market breadth, 25%: Advancing stocks compared with advancing plus declining stocks, preferably using a five-session average. Higher score means broader positive participation.
• Volatility, 20%: India VIX percentile over approximately 252 trading sessions, reversed because higher volatility usually indicates greater fear.
• Price strength, 15%: New 52-week highs compared with new highs plus new lows. A neutral fallback is used when both are zero.
• FII activity, 15%: Rolling five-session net FII cash-market activity, normalised against its approximately 252-session historical distribution.

Normalisation to 0-100

Each raw input is transformed to a 0-100 component score using bounded ratios or historical percentiles. Percentile-based inputs compare the current value with an approximately 252-session distribution. Scores are clipped to stay within 0 and 100.

Smoothing

Five-day or longer smoothing may be used to reduce single-session noise. Smoothing should improve interpretability without hiding major market stress.

Direction

Direction is calculated from the recent score change. A score that is still low but rising can mean conditions are improving, while the same score after a decline can mean conditions are deteriorating.

Missing data

Missing inputs should be carried forward only for a short documented period or replaced with a neutral fallback when appropriate. Any material data gap should be disclosed with the reading.

Update frequency

The intended production update cadence is once after Indian market close, after authorised end-of-day inputs are available and validated.

Revision policy

Formula changes may be refined after back-testing. Historical methodology changes must be documented with the effective date and reason for the change.

Data sources

This first release uses deterministic demonstration data only. A production version should use properly authorised end-of-day market data for index levels, breadth, volatility, new highs/lows and FII cash-market activity.

Limitations

The indicator compresses many market signals into one score and may miss sector rotation, event risk, liquidity stress, valuation extremes or security-specific risks.

Disclaimer

Market Mood IndexX is an educational market-condition indicator. It is not investment advice, a trading signal or a recommendation to buy or sell securities.