The advance-to-decline ratio, a key barometer of investor sentiment, fell below one for the second consecutive month in August, touching its lowest level in six months, signalling rising uncertainty in the equity markets.
The ratio, which compares the number of advancing stocks with those declining, stood at 0.94 in August — the weakest reading since February 2025 compared to 0.95 in July. The trend underscores broad-based weakness across large-cap, mid-cap and small-cap segments, reflecting a bearish undertone among investors.
Analysts attribute the decline to persistent foreign outflows and growing nervousness around the ongoing tariff war.
Simranjeet Singh Bhatia, Senior Research Analyst at Almondz Global, said the current consolidation provides an opportunity for investors to gradually accumulate quality stocks from a medium- to long-term perspective.
On the technical charts, the Nifty has extended its correction phase and is currently trading below the 100-day moving average. However, analysts point out that the 24,000 mark — which coincides with the 200-day moving average — remains a crucial support level.
Experts, however, believe the approaching festive season, especially Diwali in October, could bolster consumption and lend support to sentiment. In the near term, analysts expect Nifty to correct towards the 24,300–24,000 range, before potentially rebounding towards 25,300–25,800 once stability returns.
In August, India's benchmark indices reflected the weakness, with both Sensex and Nifty shedding more than 1.5 percent. The broader market fared worse, with the BSE MidCap index losing nearly 2.5 percent and the BSE SmallCap index declining about 3.7 percent.
According to Kkunal V Parar, Vice President of Technical Research and Algo at Choice Broking, such depressed levels are often viewed as a contrarian indicator. “Historically, these zones tend to trigger a reversal, as they suggest oversold market conditions,” he noted.
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