After August gasp, market draws its deepest breath in four months

October's ADR hit 1.08 - its highest since June - as easing outflows let rally catch new air

The advance/decline ratio (ADR) for October rose to its strongest level since June, showing that market gains were broad-based. 

The ADR climbed to 1.08 in October — the highest reading in four months. 

After sliding to a six-month low in August, the market breadth indicator has recovered steadily over the past two months as foreign outflows eased. 

The ADR measures the number of advancing stocks relative to those declining over a set period; a reading above 1 signals that more stocks gained than fell. 

Indian equities advanced in October, buoyed by upbeat corporate earnings and optimism over a possible US–India trade deal that could slash tariffs from around 50 per cent to 15-16 per cent. 

The US Federal Reserve’s rate cut and signs of easing tensions in US-China trade relations further lifted sentiment.

 

However, uncertainty over the final contours of the US–India agreement and elevated valuations prompted bouts of profit-taking at higher levels, trimming overall gains.

 

At Friday’s close, the Sensex was 2.2 per cent and the Nifty 1.9 per cent below their respective record highs.

 

Market breadth could face pressure in the near term as a flood of initial public offerings and the expiry of lock-in periods for recently listed companies are expected to drain liquidity from the secondary market.

 

“Several mid and smallcap stocks have corrected sharply, particularly those trading at expensive valuations. Retail investors also have limited opportunities to book profits and redeploy funds,” said Chokkalingam G, founder and head of research at Equinomics Research.