- Took Sensex data starting from January 2000.
- Assumed (approximated) the Bull market started on 1st January 2003.
- Assumed the Bull market ended on 31st December 2007.
- Assumed the Bear market started on 1st January 2008.
- Assumed the Bear market ended on 9th March 2009.
- During the bull market from 2003 to 2007, I relaxed the index movements by 10%.i.e. if index moved by 100 points, only 90 points were considered.
- So if Sensex was at 1000 on 1st Jan 2003, and it moved +10 points on 2ndJan to close at 1010, then at the 10% relaxed level, Sensex would have instead closed at 1009 (= 1000 + 90% of 10 points).
- From there on, a new alternate Sensex would come into existence and which will only consider 90% of the actual movement for index level calculations.
- Same thing was repeated during the bear market of 2008-2009.
So effectively, what I did was to reduce the impact of Bull and Bear markets by 10%. Resultantly, all daily movements between 1st Jan 2003 and 9thMarch 2009 were 10% less severe.