Beneath the Surface: What 750 Stocks Reveal About Market Breadth 05Apr2026
(This is my 503rd blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.
The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance.
Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)
Introduction:
This analysis looks beyond the headline movement of the Nifty Total Market Index and focuses on what individual stocks are actually doing.
Instead of just tracking the index return, I have taken a broader approach by studying the one-month return of 750 stocks that form part of the index universe.
Each stock’s one-month return (as of 02Apr2026) is grouped into return ranges such as -10 per cent to 0 per cent, 0 per cent to 10 per cent, and so on. This helps in understanding how many stocks are falling, how many are rising, and by how much.
By converting these counts into percentages of total stocks, we get a clear picture of market breadth—whether the market movement is broad-based or driven by a small set of stocks.
This approach provides a more realistic view of Indian stock market conditions than looking at index returns alone.
It is important to note that this one-month period broadly aligns with the phase after the start of the Iran war on 28Feb2026, and therefore reflects how the market has behaved during this period of uncertainty.
Big Picture:
Markets often look one way from the index level, but the reality beneath the surface can be very different. Over the past month, the Nifty Total Market Index fell 8.1 per cent, yet the movement was shallow and widespread: a few stocks held up, many declined modestly and only a handful posted strong gains.
By looking at the return distribution of 750 stocks, we can understand which sectors and stocks showed resilience, which were hardest hit and where potential opportunities might exist—while keeping in mind that much remains uncertain.
Overall Market Breadth is Weak:
Only 25 per cent of stocks in the Nifty Total Market Index delivered positive returns, while 75 per cent declined over the past one month. This clearly shows that the market weakness is broad-based and not limited to a few sectors (see chart below).
Chart showing one-month return distribution of Nifty Total Market Index as of 02Apr2026:
Nature of the Decline is Shallow but Widespread:
Most stocks are clustered in the -10 per cent to 0 per cent range (about 53 per cent), with another 21 per cent in the -20 per cent to -10 per cent range. This indicates a gradual, widespread decline rather than panic selling or sharp crashes.
However, a one-month decline of 15 to 20 per cent, even if spread out, is psychologically significant for investors and can create caution or nervousness in the market.
Limited Upside Participation:
Only about 25 per cent of stocks generated gains, and most of them are in the 0 per cent to 10 per cent range. Very few stocks delivered strong returns above 20 per cent. This shows that upside participation is weak and selective.
This is Not the Full Picture (Important Caveat):
This one-month data largely captures the period after the start of the Iran war 2026. However, some sectors and stocks had already fallen sharply in January and February. As a result, they may appear “resilient” now simply because much of the fall has already happened earlier.
Resilience Does Not Always Mean Strength:
For example, IT stocks appear resilient in the last one month, as seen in the Nifty IT. However, this comes after a sharp correction earlier, with the index falling around 20 per cent over the past three months as against Nifty 50 return of minus 13.6 per cent (Nifty IT's past 1-month return is +0.56% versus Nifty 50's minus 8.7%).
The earlier decline was driven by concerns around AI impacting software business models. So the recent stability may reflect a pause in selling rather than fresh strength.
Validating One-Month Trends with Medium-Term Returns:
It is important to view the one-month data in the context of medium-term trends. For example, while IT stocks appear resilient over the past month, the Nifty IT has fallen around 20 per cent over the past three months.
Looking at six-month or one-year returns helps distinguish temporary pauses from genuine sector strength and avoids overestimating short-term recoveries.
Path dependency: Path dependency means that the outcome or return of an investment depends on its prior performance—past price moves influence how much it can gain or lose in the future.
Investor returns depend on prior price moves: stocks that have already fallen sharply before the one-month period may show smaller declines during the current period.
Understanding this helps prevent misinterpreting short-term movements as fresh strength or weakness.
Nifty Indices Showing Relative Resilience:
Some indices that have held up relatively better over the past one month include Nifty IT, Nifty Pharma, Nifty Healthcare, Nifty India Digital, Nifty Energy, Nifty CPSE, Nifty REITs & InvITs, Nifty Capital Markets, Nifty MidSmall IT & Telecom and Nifty 200 Quality 30 ("smart beta" index).
However, this resilience is mixed in nature and needs careful interpretation.
Capital Markets Index vs Sector Pressure:
The Nifty Capital Markets has held up over the past month even though many capital markets businesses, like brokerages faced short-term pressure.
This is because the index includes a mix of companies—exchanges, asset managers (AMCs) and some infrastructure firms—so gains in resilient names offset declines in weaker ones.
Structural demand, such as growing retail participation and mutual fund inflows, also supports certain companies.
In addition, larger firms carry more weight in the index (just three stocks, BSE Ltd, MCX Ltd and HDFC AMC have 50% weighting in the index) -- so the overall number can look stable despite sector-wide volatility.
Sector Trends are Fragmented:
Some sectors like electrical equipment, auto ancillaries, capital goods, electric two wheeler firms and power-related businesses are showing pockets of strength. At the same time, defensives like pharmaceuticals and FMCG are relatively stable.
But there is no broad-based sector leadership and performance is scattered.
Sector Size Distorts Interpretation:
Some sectors / sub-sectors have a very large number of listed companies—for example, NBFCs, consumer services, pharmaceuticals, IT software and capital goods—-while others, like, paints, shipping FinTech, oil refineries, wires & cables are much smaller.
Because of this, simply looking at the number of stocks rising or falling in a sector can be misleading. A sector with more stocks will naturally show higher counts, even if its overall performance is not particularly strong (see Annexure 1 for sectors and number of stocks).
Sectors Showing Weakness:
Over the past month, real estate, consumer electronics, defence, cables and wires, auto passenger cars, PSU oil refineries, QSR and life insurance have been among the worst hit, along with several other sectors.
This broad underperformance reflects market uncertainty, event-driven concerns and sector-specific challenges.
Sector Analysis Has Its Limitations:
Sector-wise conclusions should be treated with caution because sectors in India have very different numbers of listed companies. Also, companies within the same sector often have very different business models, making direct comparisons difficult. So this analysis is more indicative than precise.
Event Uncertainty Remains High:
The market is currently reacting to uncertainty around the Iran war. Even if the conflict situation improves, there is no guarantee of immediate normalisation in global trade, especially through critical shipping routes like the Strait of Hormuz.
This makes short-term market direction difficult to predict.
Tactical Opportunities if War Situation Were to Improve:
While the current environment remains uncertain, a quicker-than-expected easing of geopolitical tensions following Iran war—particularly around easing of the Strait of Hormuz for global shipping traffic—could lead to sharp rebounds in select beaten-down sectors.
This is a speculative scenario, as both the outcome and timing are uncertain.
For investors with a strong view on such an outcome, a small tactical allocation (for example, up to 15 per cent of the portfolio) may be considered.
In such a scenario, sectors that have fallen sharply—such as PSU oil refining companies, banks (especially frontline private banks impacted by FPI selling), fertilisers, automobiles, hotels and chemicals—could see a recovery (see Annexure 2 below).
Sectors Showing Strength (Medium to Long Term):
Looking beyond short-term fluctuations, a number of sectors have demonstrated consistent strength over three-month, six-month and one-year periods. Pharmaceuticals, metals, mining, steel tubes, compressors and pumps, castings and forgings, electrical equipment, capital markets, FMCG and automobiles have generally performed well during this period.
Within these sectors, select companies stand out for strong fundamentals: good profitability, high promoter ownership, meaningful institutional participation and low to reasonable debt levels.
This suggests that market strength is linked not just to sector themes but also to underlying business quality.
At the same time, valuations in many of these companies are elevated, reflecting investor expectations of continued high growth.
While these sectors provide a medium- to long-term anchor, careful stock selection remains crucial, as high prices leave limited room for error (see Annexure 3 below).
Bottom Line:
The market remains weak and uncertain, with widespread but shallow declines and limited upside participation. Some apparent resilience in certain sectors may reflect earlier corrections rather than fresh strength and trends are shaped as much by uncertainty and events as by fundamentals.
Medium-term performance highlights pockets of strength in sectors such as pharmaceuticals, metals, capital markets and select industrials. These sectors show relative stability and strong business quality, though valuations are often high, making careful stock selection essential.
Tactical, small allocations could be considered if specific event-driven scenarios, like an easing of the Iran conflict, materialise—but timing and outcomes remain highly uncertain.
In truth, much of this blog is my own way of clearing my thoughts. Often, when I look back at what I wrote, it feels a little funny—a humble reminder that markets are unpredictable and even well-reasoned views must remain flexible.
This is not investment advice, just my personal perspective on current conditions.
Happy investing! 😀
(This is just for educational purpose only; and should not be construed as investment advice, even though the author is a CFA Charterholder for the past 10 years. Safe to assume, the author has a vested interest in investments discussed.)
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Annexure 1:
Sectors with high number of stocks in Nifty Total Market index:
NBFCs 250+
Consumer services 240+
Pharmaceuticals 200+
IT Software 160+
civil construction 160+
Auto ancilliaries 140+
Iron & Steel products 130+
speciality chemicals 120+
electrical equipment 120+
Capital markets 60+
Annexure 2:
Scenario if Iran war were to end and Strait of Hormuz opens for all shipping traffic:
Sectors and select stocks that were beaten down and may rebound sharply (this is purely based on speculation) >
Annexure 3:
Sectors and stocks that have demonstrated consistent strength over three-month, six-month and one-year periods -- select companies stand out for strong fundamentals: good profitability, high promoter ownership, meaningful institutional participation and low to reasonable debt levels; but their valuation levels are elevated (the list is just for informational purposes only) >
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References:
Tweet thread 01Apr2026 - Nifty Indices Internals
Nifty Total Market index
Nifty Return Profile
Nifty Indices - Nifty Total Market index - PDF for March2026 factsheet
Stocks and Peer Comparison by Industry 16Feb2024
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