Market breadth continued to weaken as the advance-decline ratio slipped below 1 for the second consecutive month, indicating that declining stocks outnumbered advancing ones despite resilience in headline indices.
The Sensex and Nifty posted gains of around 2 percent in November, but both indices gave up roughly 1 percent each in December, reflecting increased volatility and profit booking toward the year-end. The weakness was more pronounced in the broader market.
The BSE MidCap index, which had managed a modest 0.4 percent gain in November, fell 1.5 percent in December, while the BSE SmallCap index declined 3.4 percent in November and slid another 2.2 percent last month. This underperformance highlights sustained selling pressure in mid- and small-cap stocks.
Market experts say the trend points to narrow leadership, with gains concentrated in select large-cap stocks, while broader participation remains muted. Rising valuations in pockets of the market, global uncertainties, and cautious investor sentiment have contributed to the pressure on smaller stocks.
The persistent weakness in market breadth suggests investors may remain selective in the near term, keeping a close watch on earnings growth, liquidity conditions, and global cues before taking aggressive positions in the broader market.
