How to make a nice fraction in subscript?

You have several options:

\documentclass[11pt]{article}
\usepackage{amsmath}
\usepackage{textcomp}
\begin{document}

\begin{align*}
M_\text{\textonehalf}&= ... \text{ The smallest}\\
M_{\frac{1}{2}}&= ... \text{ Normal \texttt{frac}} \\
M_{\tfrac{1}{2}}&= ... \text{ In-between, \texttt{tfrac}}\\
M_{\dfrac{1}{2}}&= ... \text{ Displaystyle \texttt{dfrac}} \\
M_{1/2}&= ... \text{ Inline}
\end{align*}

\end{document}

Don't forget nicefrac. And, as erik notes, \sfrac of the xfrac package. Finally, I added a \scriptscriptstyle\frac{}{}.

\documentclass[11pt]{article}
\usepackage{amsmath}
\usepackage{nicefrac,xfrac}
\begin{document}
\begin{align*}
M_{\nicefrac{1}{2}}&= \text{ nicefrac}\\
M_{\sfrac{1}{2}}&= \text{ sfrac}\\
M_{\scriptscriptstyle\frac{1}{2}}&= \text{ \texttt{scriptscriptstyle frac}}
\end{align*}
\end{document}