The Nifty 500’s recent performance underscores a widening gap between headline index strength, with over a half of them lagging key benchmark despite Nifty 50 and Sensex scaling to fresh highs recently.
BSE Sensex hit a fresh high of 86159.02, while NSE Nifty 50 peaked to an all-time high of 26,325.80 on December 1, 2025.
Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments, highlighted that NSE 500 is up by 19.2 per cent from the March lows while the Nifty is up 17.7 per cent from the March lows. The slight outperformance of NSE 500 is due to the better earnings growth of midcaps over largecaps.
While benchmark gauges have recovered steadily from their March lows, a majority of stocks within the broader universe continue to struggle.
Stressing that the NSE Nifty 500 is staging a clear split in the market, Hitesh Tailor, Research Analyst at Choice Equity Broking, said, that only a group of stocks are hitting or staying near their 52-week highs.
But, a much larger number of stocks are near their 52-week lows, especially in the mid- and small-cap space, where prices had previously run too far ahead of fundamentals.
It highlighted that the market is going through a rotation rather than a broad-based rally. Investors are showcasing preference for companies with predictable earnings and solid balance sheets. Leadership is concentrated in a few sectors, while much of the broader market continues to wait for clearer visibility on demand recovery and profit growth.
Only three sectors namely finance, healthcare and automobiles have more than half of their constituents trading above the 200-day simple moving average (SMA), indicating relative strength and sustained momentum, an analysis by Samco Securities revealed. Banks also appear comparatively steady, though still below the 50 per cent mark on long-term averages.
In contrast, several sectors, including power, FMCG, realty, infrastructure, construction materials, chemicals, retailing, iron and steel, show extremely weak breadth. In these categories, less than 20 per cent of stocks are trading above their 200-day SMA, a sign of consolidation or continuing pressure.
This weak sectoral breadth shows that the rally is being powered by only a few large-cap stocks, rather than by a broad-based upswing across the market.
Outlook for 2026
Looking ahead to 2026, the market’s tone is likely to remain selective rather than broadly bullish, Choice Equity Broking analyst said.
Large-caps, supported by more stable earnings profiles and strong institutional inflows, are expected to drive the next phase. Mid-caps could deliver selective gains, especially in industrials, manufacturing, energy transition and services areas where earnings strength remains resilient.
Small-caps, meanwhile, may stay volatile as liquidity pressures and inconsistent earnings continue to hold them back. A more durable, broad-based rally is likely only if economic indicators strengthen and earnings visibility broadens across sectors.
Published on December 5, 2025
