Advance to decline ratio slips to lowest since March 2024 as smallcap stocks fall

Even as benchmark indices the NSE Nifty and the BSE Sensex have showed some recovery of late, the broader market weakness is showing no sign of abating. In fact, the market breadth, as suggested by advance-to-decline ratio for the BSE listed stocks, has fallen to the lowest since March 2025, data compiled from the stock exchange suggested. 
In March 2024, a total of 1,943 actively traded stocks on BSE advanced and 2,334 declined, suggesting a advance t0 decline ratio of 0.83. BSE data suggested the ratio stood at 0.84 for November, with 2,177 stocks advancing and 2,602 declining for the ongoing month. It reflected the weakness in the broader markets, even as Nifty and Sensex are up about 2 per cent each this month. The BSE Smallcap index fell 3 per cent during the same period. 

A ratio below 1 suggests stocks declined more than advanced, hinting at a bearish trend. For 2025, the ratio has stayed above 1 in six of the 11 months.  

"The current leg of up move is led by Bank Nifty and followed by Midcap index which has hit a fresh all-time high this week, while Nifty is shying away 0.5 per cent from its peak. Meanwhile, Small cap index is still trading below 10 per cent from its all-time high. We expect, catch up activity to gradually pan out in small cap space in coming weeks," ICICI Securities said in a note. 

The brokerage said tracking nearing closure news of the US and India trade deal has kept Indian market upbeat. The favourable outcome could accelerate the positive momentum in the market and pave the way for return of FPIs in the Indian markets. A further cool off in Brent crude oil bodes well for domestic market, while a further decline in rupee could temper market sentiment. 

On a monthly basis, October and September's advance to decline ratio came in healthy at 1.08 and 1.05, respectively.    

“2025 has been a year defined more by time correction than outright price correction—a phase that has quietly allowed market valuations to normalize closer to long-term averages. Against this environment, our strategy has been anchored in staying invested in India’s structural growth opportunities while maintaining prudent liquidity buffers," said  Trideep Bhattacharya, CIO – Equities at Edelweiss Mutual Fund.
 
Bhattacharya said: "Our portfolio stance of being overweight domestic-demand sectors and underweight global cyclicals has worked well in this stop-start environment."

VK Vijayakumar, Chief Investment Strategist, Geojit Investments said a key takeaway from Q2 results was that midcaps were still outperforming largecaps in terms of revenue and profit growth. 

"This explains the resilience of the midcap index which set a new record recently. The picture may again favour largecaps when the Q3 numbers indicate revival of earnings growth in largecaps. In largecaps, top names in telecom, automobiles, private and PSU banks, NBFCs and capital goods will remain resilient with potential to rally. Smallcaps, in general, will be weighed down by elevated valuations," it said.