Is there any Low cost sensor or sensory circuit which can figure out the Traffic density in a Junction?
Existing systems use inductive proximity sensors buried in the road. Using this and integrating the output you could get overall traffic volume, but it would not give you instantaneous traffic density.

Since it sounds like you're doing some sort of model, I think installing wires embedded in the road-surface isn't to viable.

Your best bet, I would think, since it seems you need something that does not take significant installation is a webcam and OpenCV. I bet you could put together a system that counts the approximate numbers of cars at an intersection using a computer-vision system without too much trouble.