INSUBCONTINENT EXCLUSIVE:
As India's world-beating stock rally powers ahead, skeptics are pointing to lousy market breadth as a sign that further gains may be
harder to come by.The NSE Nifty 200 Index has more than doubled from a March 2020 low -- weathering alarming Covid-19 infection and death
rates, strict lockdowns and slower economic growth -- thanks to a massive liquidity boost from the central bank and foreign inflows
Gauges of small- and mid-cap shares have climbed a lot more amid the broad surge.Since the end of July, however, measures of red-hot small
and midcap shares have slumped and just a bunch of heavyweights have been keeping the largecap rally alive.Below are three charts capturing
the changing trend:Showing just how concentrated the rally has become in recent weeks, a market cap-weighted basket of the biggest 10 stocks
in the NSE Nifty 200 Index has outperformed the other 190 stocks by seven percentage points this month.The NSE Nifty Smallcap 250 Index has
plunged 8.6% so far in August, on course for the first monthly drop since October
The NSE Nifty Midcap 150 Index has lost 3.1%."There is a shift of smart money from mid-caps to large-caps and this has created pressure,"
said Gaurav Garg, head of research, at CapitalVia Global Research Ltd
Most major companies' earnings for the latest quarter were in line with the consensus view, and this prompted investors to take profit on
smaller shares and buy underperforming larger peers, he added.In another potentially worrying sign, participation in the rally is thinning
Even as the Nifty 200 set a series of fresh record highs, the number of stocks in the gauge trading above their 50-day moving averages has
tumbled to about 45%, from nearly 100% in June."Gross market volumes have been relatively weak compared to the trend in July, with large
caps seeing stronger flows than mid caps," said S
Hariharan, head of sales trading at Emkay Global Financial Services Ltd.
