November saw a significant loss in market breadth, with the advance-to-decline ratio—a crucial indicator of investor sentiment—dropping below one to its lowest level in nine months. According to experts, the drop is indicative of a growing gap between headline indexes and the overall market.
Compared to 1.08 in October and 1.05 in September, the ratio, which counts the number of increasing against dropping stocks, fell to 0.82 in November, its lowest level since February 2025.
As the overall market loses steam, large caps raise indicators.
Hitesh Tailor, a research analyst at Choice Broking, claims that while the majority of headline indices—the “foot soldiers” of the market—continue to lose ground, a few heavyweight large-cap stocks are supporting them. As momentum wanes in the midcap and smallcap divisions, this narrowing range has kept benchmark indices close to all-time highs.
Volatility Caused by Domestic and International Factors
A variety of domestic and international factors contributed to the market’s volatility in November. Ahead of the monthly derivatives expiration and important macroeconomic announcements, such as the Q2 GDP report, caution increased in India.
Due to a stronger US dollar and changing assumptions regarding the Federal Reserve’s rate-cut trajectory, foreign investors reduced their exposure globally. The turmoil was further exacerbated by fluctuations in global yields, stock-specific earnings reactions, and profit-taking at higher prices.
Despite headline gains, other indicators lag.
Although the benchmark Nifty and Sensex have both increased by about 0.7 percent in November, other indexes have underperformed considerably. Fatigue in categories that experienced significant valuation run-ups earlier in the year is indicated by the 1% decrease in both the BSE MidCap and SmallCap indices.
According to Shitij Gandhi, Senior Research Analyst (Technical) at SMC Global Securities, profit-booking and selective corrections are more common in midcaps and smallcaps, where pressure is most noticeable. He claimed that while large-cap financials are largely stable, sectoral weakness is focused in information technology, chemicals, pharmaceuticals, and manufacturing.
Long-Term Hope, Short-Term Caution
The short-term market situation is still precarious, analysts warn. To indicate a widespread resurgence in market activity, the advance-to-decline ratio must continue to increase over one. Equities are still vulnerable to more corrections till then.
However, due to solid domestic economic fundamentals, economists continue to retain a somewhat optimistic long-term view. They see the present downturn as a normal stage of consolidation. Instead of making aggressive entries, investors are encouraged to adopt a selective, buy-on-dips strategy. Only when participation increases throughout the broader market is a more pronounced trend reversal anticipated.
