Market Mood Index

What’s the sentiment on the street today?

Current Value

0

Last Updated

We are in the Extreme Fear
zone right now

  • Last close

    23.57

    Extreme Fear

  • 1 week back

    50

    Neutral

  • 1 month back

    61.34

    Greed

  • 1 year back

    78.54

    Extreme greed

Brought to you by

ET-NOW

smallcase

What’s the MMI?

The MMI is an investor sentiment tool that describes the current mood of the market

The index is divided into 5 zones based on the value that represent the following emotions

  • Extreme Greed (71-100)
  • Greed (51-70)
  • Neutral (50)
  • Fear (30-49)
  • Extreme Fear (0-29)

“Be fearful when others are greedy & greedy when others are fearful”

Warren Buffett

A high extreme greed value (>80) suggests investors should be cautious in opening fresh positions as markets are overbought & likely to reverse

A high extreme fear value (<20) suggests a good time to open fresh positions as markets are likely to be oversold and might turn upwards

Components

MMI takes into account 7 important factors to give a complete 360 degree picture of the emotions driving the market

FII Activity

This is the net open interest of FIIs in Index Futures on the NSE. Tracking movement in this indicator gives insight into FII views about the markets

Higher than average value suggests bullish FII view about the market

Volatility

Volatility is measured by the India VIX index. It is the implied volatility of 1 month Nifty options and is a measure of the market's expectation of volatility in the near term

High VIX value suggests that market participants are expecting increased risk and volatility in the market

Skew

Volatility only tells us that the markets are expecting some movement, but doesn't tell us anything about the direction. Skew is used to measure the expectations around market direction. It is calculated as the difference between implied volatilities (IV) of OTM put options and OTM call options of Nifty

So, a higher than average value of skew represents a high chance of downward movement

Momentum

It is the difference between 90D & 30D exponential moving averages of Nifty, divided by 90D moving average

A positive value indicates an uptrend and vice versa

Market Breadth

It is calculated by dividing AD Ratio by AD Volume (Modified Arms Index)

A relative low value indicates strong market move supported by volumes

Price Strength

It is tracked by subtracting % of stocks near their 52W low from % of stocks near their 52W high to calculate the net % of stocks near their 52W high

Higher value indicates better price strength in the market

Demand for Gold

It is the relative price return of Gold vs Nifty for last 2 weeks

If the return of gold is increasing relative to Nifty, it indicates a movement away from equities into safer commodities like Gold

Backtest

Historically we have observed that market bottoms out when MMI reaches high extreme fear zone & tops out when it reaches high extreme greed zone

> Read a post on a backtested trading strategy based on Nifty futures and MMI

Green line marks the period when the MMI fell below 20 and red line marks the occurrence of values above 80

MMI is a sentiment index and investors shouldn't take buy/sell decisions, just based on the current value

But once an investor has decided to invest or close existing positions, the MMI can help them better time the market