The Business Standard article titled "A bull-market illusion?" Handful of stocks driving the surge, data reveals" examines the current state of the Indian stock market, highlighting concerns that the recent rally in benchmark indices may not reflect a broad-based market recovery.
Concentration of Gains: While the Nifty 50 index has recovered approximately 14% from its recent low and is less than 5% below its all-time high, this recovery is not widespread. Data indicates that 82% of Nifty 50 stocks remain below their peak levels from September 27, 2024.
Broader Market Lag: In the NSE 500 index, over 72% of stocks are still trading below their September 2024 closing prices. Notably, 28% of these stocks have declined more than 20% from those levels.
Limited Leadership: Analysts from SAMCO Securities point out that only about 30–35 companies among the top 750 listed have driven the recent rally. They describe the situation as a "bull mirage," suggesting that the apparent market strength is misleading.
Top Performers and Laggards: Significant gainers include JSW Holdings (up 156%), BSE (98%), and defence PSUs like Mazagon Dock Shipbuilders (61%). Conversely, companies like Sterling and Wilson Renewable (down 54%) and Adani Green Energy (down 51%) have seen substantial declines since late September 2024.
Technical Indicators: Despite the uneven recovery, some experts note positive technical signals. Chandan Taparia from Motilal Oswal Financial Services mentions that the Nifty's rise above its 50-day exponential moving average, coupled with strong SIP inflows and increased activity from both FIIs and DIIs, indicates sustained bullish momentum.
In summary, while headline indices suggest a robust market, the underlying data reveals that the rally is concentrated in a limited number of stocks, raising questions about the overall health and breadth of the market's recovery.
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