Swinging back: Advance-decline ratio highest since June 2020, shows data

A broad-based recovery in equities last month pushed the advance-decline ratio (ADR) — a key measure of market breadth — to 1.54 in April, the highest since June 2020. The ADR had slipped to 0.77 in March, its lowest since February 2025. An ADR below 1 indicates that declining stocks outnumber advancing ones.

 

Market breadth improved because of broad-based gains. The Sensex rose 6.9 per cent and the Nifty 50 was up 7.5 per cent in April — their strongest monthly performance since December 2023. This follows a sharp correction in March, when the indices fell 11.5 per cent and 11.3 per cent, respectively — the steepest fall since March 2020.

 

Broader markets outperformed. The Nifty Midcap 100 climbed 13.6 per cent, which was its best showing since November 2020. While, the Nifty Smallcap 100 surged 18.4 per cent, the highest since May 2014.

 

Sentiment was aided by a three-week ceasefire between the US and Iran and the absence of negative surprises during the earnings season.

 

Going ahead, market participants expect the ADR to remain strong, supported by continued momentum in mid- and small-cap stocks on the back of strong domestic liquidity. 

 

“Retail investors are not affected by rupee depreciation, and after the rout since October 2024, many mid- and small-cap stocks still offer value despite the recent rally,” said Chokkalingam G, founder of Equinomics.