Both moderate exercise and adequate sleep are essential for happiness:

GMAT Club Tests' Official Explanation

There are different grammatically correct tense combinations possible for the verbs in the part after “indicated that” (i.e. within the action / statement in simple past):

1. Universal truth: to exercise, to sleep and to feel, all in simple present
2. A general truth in the past: to exercise, to sleep and to feel, all in simple past
3. A specific observation in the past: to exercise and to sleep in the past perfect and to feel in the simple past (to depict that exercising and sleeping occurred before feeling).

A. The combination of past perfect (“had exercised” and “had slept”) with simple present (“feel”) is wrong.

B. The combination of past perfect (“had exercised”) with simple present (“feel”) is wrong. (Note: The present participle takes up the tense of the verb it modifies and thus the action sleeping can also be considered to be the same tense as exercising.)

C. The tense combination is alright. All the verbs “exercise”, “sleep” and “feel” are in the simple past to indicate a general truth in the past. However in this option the problem is with the pronoun “those” - this pronoun introduces a new copy of the noun “people” distorting the meaning. This option means that there are two sets of people, one that exercises and the other that sleeps. Both of these sets of people feel happy - this meaning is not intended because the first part of the sentence before the colon (“Both moderate exercise and adequate sleep are essential for happiness”) indicates that the same set of people must do both the actions, exercising and sleeping, to feel happy.

D. The combination of simple past (“exercised”) with simple present (“feel”) is wrong.

E. CORRECT. A Universal truth is depicted using simple present for all the three verbs exercising, sleeping and feeling, even though they come within an action or a statement (indicated) in the simple past.