Largecaps bear brunt of selloff as 84% of Nifty50 stocks slip below 200-DMAs

Mumbai: The Indian stock market's latest selloff is increasingly becoming a large-cap story, with 84% of Nifty 50 stocks now trading below their 200-day moving averages (DMAs), while smaller stocks have shown greater resilience.

In the Nifty 50, 42 of the 50 stocks are below their 200-DMA. In the Nifty 500, 310 stocks, or 65%, are below the level, compared with 452 stocks, or 45%, in the broader BSE 1000.

The 200-day moving average (200-DMA), calculated from the average closing price over the past 200 trading sessions, is widely regarded as a key indicator of the long term trend of an index or a stock. When a stock trades above it, the trend is considered positive, while when it falls below, it shows weakness.

"The divergence reflects the performance of different market segments over the past six months, with small- and micro-cap stocks seeing strong outperformance and mid caps also performing better than the Nifty," said Rohit Srivastava, founder of Indiacharts.

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The pressure is visible among blue-chip stocks. Tata Motors PV, Maruti Suzuki and Infosys are trading nearly 19% below their respective 200-DMA levels, while TCS is down around 18%. HUL, ITC and Jio Financial are each around 17% below their 200-DMA, while RIL, HDFC Life, Tata Consumer, ONGC, M&M and HDFC Bank are around 14% below the level.

Some of the weakness has spilled over into mid caps too but not as much in small- and micro-cap stocks, suggesting that selling remains concentrated in large caps. Within the Nifty 500, 190-odd stocks are trading above their 200-DMA. Of these, 52 are 1-5% above the level, 28 are 5-10% above, 65 are 10-20% above, 21 are 20-30% above and 15 are more than 30% above their 200-DMA.

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The BSE 1000 presents a broader picture, with 542 stocks still trading above their 200-DMA. Of these, 97 are within 1-5% of the level, 114 are 5-10% away, 188 are 10-20% away, 100 are 20-30% away and 43 are more than 30% above their 200-DMA.

"The correction is not impacting all segments equally, with large caps currently showing greater deterioration while parts of the mid- and smallcap space are holding their long-term trend better," said Hitesh Tailor, technical research analyst at Choice Broking.

"The gap between Nifty 500 and BSE 1000 breadth points to market dispersion rather than uniform weakness," said Tailor.

Oversold

While a decline below 200 DMA points to a weak undertone, extreme readings are considered contrarian indicators.

Analysts said the extent of fall in blue-chips is suggesting the selling is overdone. "The drop in Nifty is showing it is oversold as it was in March of 2020 or even in March of 2026 this year," said Srivastava. "Such extreme readings in the Nifty have historically been associated with market bottoms."

Mid- and small-cap stocks are not yet there. "A similar condition across the Nifty 500 would point to broader market capitulation. But we have not seen capitulation across the board as of now," he said.

Mehul Kothari, vice-president, Technical & Derivative Research, Anand Rathi Share and Stock Broker, said the next signal would come from whether breadth starts confirming the support visible in the indices."If Nifty 500 sustains its long-term trendline support and the percentage of stocks below their 200-DMA starts declining, it would indicate improving participation and potential stabilisation," he said.

Conversely, if more stocks currently within 1-10% of their 200-DMA start slipping into the 10-30% zone, it would suggest that the correction is broadening."