The MicroStocks Conviction Score (internally called the Micro-Score) is a 0–10 composite rating that synthesises fundamental quality, price momentum, and real-time sentiment into a single actionable number. This article explains exactly how it's computed and how to interpret it.
The Three Pillars of the Micro-Score
1. Fundamental Health (40% weight)
We screen 15 fundamental metrics across profitability, leverage, and capital efficiency. Key inputs include: Return on Equity (ROE), Debt-to-Equity ratio, Revenue CAGR over 3 years, Operating Cash Flow consistency, Promoter pledging percentage, and EBITDA margin trend. Each metric is normalised against sector peers rather than absolute thresholds — a 12% ROE means different things for a PSU bank versus a specialty chemical company.
2. Momentum Signals (30% weight)
Momentum captures price action quality, not just direction. Inputs include: RSI (14-day) relative to sector average, 20-day and 50-day moving average alignment, volume-weighted momentum over 5/20 days, relative strength vs. Nifty Smallcap 100, and 52-week high/low positioning.
3. News Sentiment (30% weight)
We run a fine-tuned FinBERT model (trained on financial news corpora) across 15+ news sources including ET Markets, Business Standard, Moneycontrol, regional Telugu/Marathi business outlets, and BSE/NSE announcements. Sentiment scores are decayed over time — news from 30 days ago has 1/4 the weight of yesterday's headlines. Corporate announcements (DRHP filings, QIP raises, board changes) receive 3× the weight of media opinion pieces.
Score Interpretation Guide
- 8.0–10.0: High Conviction — all three pillars aligned positively
- 6.0–7.9: Moderate Conviction — mixed signals, requires deeper research
- 4.0–5.9: Neutral — no clear edge, better opportunities likely available
- 2.0–3.9: Caution — at least one pillar is deteriorating
- 0.0–1.9: Avoid — fundamental distress or severe negative momentum
What the Score Doesn't Tell You
The Micro-Score is not a buy/sell signal. It doesn't account for your personal risk tolerance, portfolio concentration, or macroeconomic scenarios. A score of 8 on a highly illiquid stock may still be un-investable for many retail investors. Always combine the score with valuation analysis and position sizing discipline.