Market breadth weakened sharply in November, with the advance-to-decline ratio—a key gauge of investor sentiment—slipping below one to its lowest level in nine months. Experts said the decline underscores a widening disconnect between headline indices and the broader market.
The ratio, which compares the number of rising stocks with those declining, fell to 0.82 in November, its weakest reading since February 2025, after registering 1.08 in October and 1.05 in September.
Hitesh Tailor, Research Analyst at Choice Broking, said the headline indices are being lifted by only a few heavyweight large-cap counters, while most other stocks—the “foot soldiers” of the market—are losing ground. This shrinking market participation has left benchmark indices hovering near record highs even as momentum slips in midcap and smallcap segments.
November’s volatility was fuelled by a mix of domestic and global triggers. Within India, caution built ahead of the monthly derivatives expiry and key macroeconomic data releases, including the Q2 GDP print. Globally, foreign investors pared exposure amid a stronger $ and shifting expectations around the Federal Reserve’s rate-cut trajectory. Swings in global yields, stock-specific earnings reactions and profit-taking at elevated levels further added to the turbulence.
Despite the benchmark Sensex and Nifty rising around 0.7 percent each in November so far, broader indices have lagged sharply. The BSE MidCap and SmallCap indices have both declined around 1 percent and 4 percent respectively, reflecting fatigue in pockets that had seen steep valuation run-ups earlier in the year.
Shitij Gandhi, Senior Research Analyst (Technical) at SMC Global Securities, said the strain is most visible in midcaps and smallcaps, which are witnessing profit-booking and selective corrections. Sectoral pressure, he added, is more pronounced in information technology, chemicals, pharmaceuticals and manufacturing, while large-cap financials remain comparatively steady.
Analysts warn that the near-term setup remains fragile. A sustained move in the advance-to-decline ratio above one will be crucial to confirm a broad-based recovery in market participation. Until then, equities remain vulnerable to further correction.
Even so, experts retain a mildly positive long-term outlook, supported by firm domestic economic fundamentals. The current weakness, they say, could be viewed as a healthy consolidation phase. Investors are being advised to take a selective, buy-on-dips approach rather than making aggressive entries. A clear trend reversal is expected only when participation widens across the broader market.
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