Market Breadth At Its Lowest Since 2011
Only one in five stocks has returned gains this year, the lowest in seven years, as equity markets remain volatile.
The advance-decline ratio dropped to 0.3 percent, with 113 stocks gaining and 380 declining on the NSE Nifty 500 Index so far this year.
India’s benchmark Nifty 50 has risen 3.6 percent so far this year. But the broader Nifty 500 fell 4.4 percent as fears of global tariff war, higher fuel prices and a weaker rupee hurt sentiment. The recent liquidity concerns around non-bank lenders triggered by a string of defaults by IL&FS added to the selloff. The Nifty Midcap 100 index fell 14 percent and Nifty Smallcap 100 index dropped 20 percent in September—the biggest monthly fall for them since October 2008.
Among the worst performers this year are Vakrangee Ltd. which tumbled 94 percent, followed by PC Jewellers Ltd. that dropped 88 percent and 8K Miles Ltd. which plunged 80 percent. Merck Ltd. led the gains with 106 percent returns, followed by Indiabulls Ventures Ltd.’s 93 percent surge and NIIT Technologies Ltd.’s 75 percent rise.
“A low advance-decline ratio indicates an oversold market, while a high advance-decline ratio indicates an overbought market,” Avinash Gorakshakar, head of research at Joindre Capital Services Ltd. All the bad news looks factored in and the market, he said, is expected to recover on the probability of strong second-quarter earnings.