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Understanding Market Regimes
The 7 market states FynSight classifies daily and what to do in each.
NARROW LEADERSHIP · 62% confidence
61% above 50-DMA · moderate
15 · contained
What Is a Market Regime?
A market regime is a distinct state defined by the interaction of breadth, volatility, institutional flows, and sector leadership. Different regimes demand different strategies. The mistake most investors make is using the same approach in every regime.
FynSight's classifier uses 6 inputs: breadth (% above 50-DMA), volatility (India VIX), FII flow direction, DII flow direction, sector leadership concentration, and market-cap layer participation. The engine weights these inputs based on their historical predictive power and produces a regime classification with a confidence score.
The 7 Regimes
Broad Expansion
PositiveAction: Stay fully invested. Midcaps and smallcaps outperform. Pullbacks are buying opportunities.
Rotational
NeutralAction: Stock selection matters more than market direction. Ride the rotation.
Recovery Transition
PositiveAction: Best time to add positions. Uncertainty fading, prices not fully recovered.
Narrow Leadership
CautionAction: Reduce midcap/smallcap exposure. Watch leading sectors obsessively.
Defensive
WarningAction: Rotate to Pharma, FMCG, IT. Reduce cyclical exposure.
Panic / Risk-Off
AlarmAction: Wait for breadth stabilization. Panic regimes are short but can overshoot.
How Regimes Change
Regimes don't flip randomly. They follow transition paths:
Not every cycle goes through every regime. The most common skip is from Narrow Leadership directly to Recovery Transition (skipping Defensive and Panic) when the FII selling trigger resolves. The most dangerous path is Narrow Leadership → Defensive → Panic, which happens when the FII trigger persists and DII absorption capacity is exhausted.
See today's regime and confidence score
