Fear Greed Index (FGI) is the key to make good returns in the Indian Stock market. It is based on the investment advice that has been tested against time. The Indian market swings like a pendulum.
It is cheap when people are fearful and it becomes expensive when people are greedy and vice versa.
From the perspective of an investor, remaining emotionally calm is very important especially in the times of fear and greed and this will help in getting good investment returns.
The mantra is to Sell to the materialistic and buy from the one who is petrified
Hence to understand this Fear Greed Index was created. This was created by CNN.
The Fear Greed Index is plotted on a scale of zero to hundred with zero representing the cheapest and hundred represents the most expensive.
The lower the value of the FGI, the higher the returns and vice versa a
The Fear and Greed Index is based on seven indicators:
1. Stock Price Momentum
2. Stock Price Strength
3. Stock Price Breadth
4. Put and Call Options
5. Junk Bond Demand
6. Market Volatility
7. Safe Haven Demand
Each of these seven indicators is plotted on a scale from 0 to 100.