According to BSE data, the advance-decline ratio (ADR) stood at 1.06 in May, with 2,498 stocks gaining and 2,352 declining, even as the Sensex fell nearly 3 per cent during the month.
While sustained foreign portfolio investor (FPI) selling continued to weigh on large-cap stocks and benchmark indices, broader markets remained buoyant, supported by strong inflows from individual investors through both direct equity investments and mutual funds. The midcap index rose more than 3 per cent in May, outperforming the Sensex by nearly 6 percentage points and touching a record high during the month. The small cap gauge also ended in positive territory, gaining nearly 1 per cent.
“Midcap stocks are outperforming because they are not the typical FPI favourites. Foreign funds have largely been selling largecap names, such as major banks and other index-heavy stocks, which has weighed on benchmark indices and overall sentiment. Midcaps, on the other hand, are driven more by domestic retail and HNI investors, who are effectively having a party of their own,” said U R Bhat, cofounder of Alphaniti Fintech.
“Midcaps will continue to outperform. They are relatively insulated from rupee weakness and FPI selling, while offering unique investment opportunities and value. Moreover, hundreds of thousands of new retail investors are entering the market every week. Domestic institutional investors are also buying midcaps where FPI ownership is relatively low,” said Chokkalingam G, founder of Equinomics. Market breadth improved sharply after the indices bottomed out in March. The ADR had surged to 1.54 in April — the highest level since June 2020 —after slipping to 0.77 in March, its lowest reading since February 2025.
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