A broad-based market rally flexes its muscles: Strength or just a stretch?

A broad-based rally last week lifted market breadth, with the advance/decline ratio (ADR) crossing 1 for the first time since November 2024, reaching 1.2 in March. This marks the highest ADR since June 2024, with a week still left in the month.

 

The ADR, a key measure of market breadth, tracks the number of advancing stocks against decliners. Last week’s rebound, driven by bargain hunting and hopes of a turnaround in foreign portfolio investor (FPI) flows, pushed the Sensex, Nifty, and the broader Nifty Midcap 100 and Nifty Smallcap 100 to their strongest weekly gains in years. 

 

Despite this improvement, doubts persist over the rally’s durability.

 

“The current upswing may be a temporary bounce. The impact of reciprocal tariffs, set to take effect in early April, remains uncertain. Markets could form a double bottom, where they test a low, recover, and revisit the low before stabilising — a process that might take three months or longer,” said independent equity analyst Ambareesh Baliga.

 

With uncertainty clouding the market’s direction, investors remain wary, waiting for clearer signals before making big moves.