While benchmark indices like the Nifty 50 appear poised to scale new highs—possibly flirting with the 25,000 mark—a deeper dive into the data suggests that the current market rally may not be as widespread as it seems. According to a recent note by SAMCO Securities, only a small group of stocks is driving the surge, raising concerns about the true breadth of this bull run.
A Narrow Rally: Most Stocks Still in the Red
Despite the Nifty 50 recovering 14% from its recent low of 21,750, and now less than 5% away from its all-time high, the broader market tells a more sobering story:
- 82% of Nifty 50 constituents are still trading below their peak closing prices from September 27, 2023.
- In the NSE 500, over 72% of stocks remain below their September 27 levels.
- Nearly 28% of these stocks are down more than 20% from their highs—technically placing them in bear territory.
- Less than 5% of stocks have rallied more than 25% in this period.
- Only 30–35 stocks out of the top 750 are responsible for the majority of the gains.
“This isn’t a bull market — it’s a bull mirage. Not a rotation, but a massacre disguised as a milestone.”
— Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities
Top Performers and Laggards
📈 Big Gainers Since September 27, 2023:
- JSW Holdings: +156%
- BSE Ltd: +98%
- Transformers & Rectifiers: +67%
- Mazagon Dock Shipbuilders: +61%
- Bharat Dynamics: +62%
- Garden Reach Shipbuilders: +45%
📉 Top Losers:
- Sterling & Wilson Renewable: -54%
- Adani Green Energy: -51%
- Ola Electric Mobility: -49%
- BrainBees Solutions (FirstCry): -46%
- IndusInd Bank: -46%
These figures point to a clear divergence between benchmark index movement and broader stock performance.
Why Momentum Still Matters
Despite the narrow nature of the rally, many analysts believe the long-term momentum remains intact:
Technical Signals Are Positive
- The Nifty has rallied over 3,000 points from recent lows.
- It’s now trading above the critical 50-day Exponential Moving Average (EMA)—a key bullish indicator.
“This kind of recovery doesn’t happen in a bear market,”
— Chandan Taparia, Head of Derivatives & Technicals, MOFSL
🔹 Institutional Flows Support the Rally
- SIP flows from domestic investors are at record highs.
- Foreign Institutional Investors (FIIs) have shifted from net sellers to net buyers.
- The FII long-short ratio has turned positive, indicating a more optimistic outlook.
Selective Sector Rotation in Play
Taparia also emphasized that while heavyweights like Reliance Industries and the Banking sector have led the current rally, sector rotation is expected to broaden market participation. Emerging sectors include:
- Defence
- Metals
- IT services
The Bank Nifty hitting new highs further supports the bullish sentiment.
Conclusion: Illusion or Transition?
The Indian stock market is currently caught in a paradox. On one hand, benchmark indices paint a picture of strength and momentum. On the other, a vast majority of stocks are still far from their previous highs, reflecting uneven recovery and sectoral concentration.
This raises a critical question:
🔍 Are we in the early stages of a genuine bull market, or just witnessing a mirage driven by a few select giants?
For investors, this is a time to stay cautious yet alert, focusing on quality, fundamentals, and the broader trend beyond index levels.
Original news source: https://www.business-standard.com/markets/news/a-bull-market-illusion-handful-of-stocks-driving-the-surge-data-reveals-125052000496_1.html
