Overview
The STOCKAN Market Sentiment Engine synthesizes seven distinct data streams into a single composite score from 0 to 100 — where 0 is extreme fear and 100 is extreme greed. Think of it as the NSE equivalent of the CNN Fear & Greed Index, but built specifically for Indian market dynamics with actionable precision.
The Seven Sentiment Inputs
1. India VIX Level & Direction (Weight: 25%)
- Current VIX relative to 20-day average
- VIX trend (rising = fear increasing, falling = fear decreasing)
- VIX percentile vs 1-year history
2. NIFTY Option Chain PCR (Weight: 20%)
- Overall index PCR
- Strike-weighted PCR (heavier weight to high-OI strikes)
- PCR trend over 5 sessions
3. FII Net Positioning (Weight: 20%)
- 5-day rolling FII net flows (cash)
- FII index futures long/short ratio
- FII trend momentum score
4. Market Breadth — Advance-Decline Ratio (Weight: 15%)
- Ratio of advancing to declining stocks in NSE 500
- New 52-week highs vs lows
- Percentage of stocks above 50-day moving average
5. Option Chain Skew (Weight: 10%)
- Put/Call skew at 5% OTM levels
- Skew steepness (high put premium = fear)
- Skew changes vs previous session
6. NIFTY Momentum Score (Weight: 5%)
- Relative position vs 20-day moving average
- RSI (14-day) level
- Rate of change (momentum)
7. Sector Breadth (Weight: 5%)
- How many of 11 NIFTY sectors are outperforming
- Sector rotation signals
- Defensive vs cyclical allocation
Sentiment Score Interpretation
| Score | Zone | Market Condition | Suggested Bias |
|---|---|---|---|
| 0-20 | Extreme Fear | Panic, heavy selling | Contrarian long opportunities |
| 21-35 | Fear | Bearish sentiment | Defensive; small contrarian bets |
| 36-50 | Slight Fear | Below-neutral sentiment | Neutral; wait for clarity |
| 51-65 | Slight Greed | Above-neutral sentiment | Moderate bullish bias |
| 66-80 | Greed | Bullish euphoria | Take profits; tighten stops |
| 81-100 | Extreme Greed | Overheated market | Strong caution; hedge longs |
How to Use the Sentiment Score
For Directional Traders
The score is most useful as a filter, not a signal:
- Score 0-30 (Fear Zone): Avoid chasing bearish trades; market may be near short-term bottom
- Score 70-100 (Greed Zone): Avoid chasing bullish breakouts; market may be near short-term top
- Score 35-65 (Neutral Zone): Follow the prevailing trend; use technical analysis for entries
For Options Premium Sellers
- Score < 25 (Extreme Fear): IV is typically very high → ideal for selling premium (iron condors, short strangles)
- Score > 75 (Extreme Greed): Consider long Vega positions ahead of potential vol expansion
For Positional Traders
Use the 5-day average sentiment score rather than single-day readings:
- 5-day average below 30: Start building long positions in tranches
- 5-day average above 75: Start reducing longs, adding partial hedges
The Sentiment Engine vs India VIX
VIX is a single-dimension view (volatility only). The Sentiment Engine incorporates VIX but contextualizes it:
- VIX can be high due to event uncertainty (upcoming budget) — not necessarily fear
- VIX can be low while PCR is extremely high — showing hidden defensive positioning
- The Engine's composite view is more robust than any single indicator
Historical Performance
Backtested signals (2019-2024, NIFTY):
- When score drops below 20: NIFTY positive 68% of the time over next 10 sessions
- When score rises above 80: NIFTY negative 61% of the time over next 10 sessions
- Signal strength improves when confirmed by FII data and technical levels
Real-Time Updates
The Sentiment Engine updates every 15 minutes during market hours. A daily summary email is available to subscribers. The dashboard shows the current score, 5-day trend, and contribution breakdown from each of the seven inputs — so you always know why the score is what it is.
Disclaimer
The Sentiment Engine is a quantitative tool designed to help contextualize market conditions. It is not a trading signal or investment recommendation. Past performance of the indicator does not guarantee future results.