Nifty at record highs, but portfolios still bleed. SAMCO Securities lists 4 reasons why
Despite Nifty hitting a fresh all-time high, most retail portfolios remain in the red as gains are concentrated in a few heavyweight stocks. Broader market weakness, poor small- and mid-cap performance, and narrow participation continue to drag in...
As the Nifty 50 scaled to a fresh all-time high of 26,310.45 this week, many retail investors are left wondering why their portfolios continue to languish in the red. Despite the index's robust performance, only a fraction of stocks are actually delivering gains.
According to a market note by SAMCO Securities, the broader equity rally is largely an illusion for most portfolios, with the pain masked by a few heavyweight index movers.
Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, explains that while benchmark indices like the Nifty paint a picture of widespread prosperity, the granular data tells a very different story.
Out of the top 750 stocks by market capitalization, only 252 have posted gains, while 464 are in negative territory. The median return stands at -10.54%, and the average return is -5.24%. Notably, 268 stocks have declined more than 20%, while only 117 stocks have risen over 20%.
Sheth outlines the reasons behind this divergence:
Concentration of gains in index heavyweights: According to Sheth, the Nifty’s climb is being powered by a limited set of heavyweight constituents that have managed to perform well. These stocks have disproportionate influence on the index, creating a skewed perception of market health.
Underperformance of broader market: The Nifty Microcap 250 has fallen nearly 10% from its previous peak, and the Nifty Smallcap 250 is down about 9%. These segments, where most retail investors are typically exposed, have lagged the large-cap space significantly.
Retail participation dragged down: Many retail portfolios are tilted toward small- and mid-cap stocks, which have borne the brunt of recent corrections. As a result, even as the headline index touches new highs, the actual experience for retail investors remains dismal.
Lack of breadth in market rally: Sheth points out that out of the 716 stocks listed for over a year, a staggering majority are still in the red. This lack of participation across the broader market highlights the narrow nature of the rally.
“Until the participation widens,” Sheth concludes, “the average portfolio will not reflect the strength seen in the headline index.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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