A rally leaning too far: A Jenga-high market with a wobbling base

ADR falls to 0.89 - November's gains now balance on a shrinking block of stocks, the lowest since February

Broader markets lagged even as benchmark indices hit fresh highs in November. The advance/decline ratio (ADR) for the month fell to 0.89, its lowest since February 2025. ADR tracks the number of advancing stocks relative to declining ones over a set period; a reading below 1 indicates more stocks fell than rose. 

This drop follows a four-month peak last month. Analysts point to retail investors redirecting funds towards initial public offerings (IPOs) and futures and options as a key reason for the narrow market breadth. In addition, sharp corrections in mid and smallcap stocks have left retail investors with limited room to book profits and reinvest. 

“The weakness isn’t visible in benchmark indices because institutional buying cushions the impact. Even when institutions invest in mid and smallcap stocks, they focus on a small subset, usually index constituents. Unless the IPO boom slows and retail money returns to broader stocks, market breadth is unlikely to improve,” said Chokkalingam G, founder and head of research at Equinomics Research.