Why the sharp August rally in stocks raises more concerns than jubilation

Despite a 5,000-point surge by Sensex, overall market breadth was the worst since March 2020 when stocks had collapsed following the spread of the Covid-19 pandemic

The sharp up move in the market in August has raised more concerns than jubilation. The benchmark Sensex rose by nearly 5,000 points, or 9.4 per cent during their month—its best monthly showing in nine months. Despite this, the overall market breadth was the worst since March 2020 when the stocks had collapsed following the spread of the covid-19 pandemic.

In August, 1,755 stocks listed on the BSE advanced, while 1,888 fell, resulting in an advance-decline ratio of 0.93. Since April 2020, the market breadth has been negative only on one other occasion in March 2021. Also, the returns on