November sees second-best ADR performance in 2023 after April, shows data

Analysts credit outsized gains in key index components for turning the tide

In November, the advance/decline ratio (ADR) recorded the second-best performance for the calendar year 2023, following April.

Last month, 2,243 stocks advanced, while 1,931 declined on the BSE — resulting in an ADR of 1.2.

In April, during the market rebound from this year’s lows, the ADR reached 1.4, with 2,300 stocks advancing and 1,638 declining.

Despite the significant upswing in the market last month, the ADR remained relatively subdued. Notably, the National Stock Exchange (NSE) Nifty Smallcap 100 surged by 12 per cent, marking its highest increase since February 2021.

Concurrently, the NSE Nifty Midcap 100 and the NSE Nifty50 rose by 10.4 per cent and 5.5 per cent, respectively, representing the most substantial gains since July 2022.

Analysts emphasise that the outsized gains in certain index components contributed to the improved return scenario for the markets in November.

Realty, pharmaceutical, automotive, and energy stocks experienced robust growth, while financial and fast-moving consumer goods stocks underperformed during the same period.

“Last month’s rally caught many by surprise. The gains were not supported by substantial volumes. Although the ADR ratio was higher compared to the preceding months, it wasn’t exceptionally high, considering the broader market outperformance witnessed,” noted an analyst.

Globally, most markets rallied in November as US bond yields sharply declined from their highs, fostering optimism that the US Federal Reserve had concluded its interest rate hikes and would soon initiate rate cuts.

In November, domestic benchmark indices performed below the Morgan Stanley Capital International All Country World Index, which saw a remarkable 9 per cent increase — the highest in three years.