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NIFTY50, SENSEX at record high, but your portfolio isn't keeping pace; here is why
3 min read | Updated on December 02, 2025, 13:06 IST
SUMMARY
NIFTY50 and SENSEX are hitting record highs, but the individual portfolios are struggling and lagging in the rally. As investors shift their focus towards large caps, the small caps and midcap stocks continue to face a dearth of buying power and momentum. Weak market breadth, underperforming mutual fund portfolios and a lack of fresh buying in small and midcaps are some contributing factors.
80% of the NIFTY50 stocks trade above 200 SMA levels, while less than 50% of smallcaps traded below 200 SMA. | Image: Shutterstock
NIFTY50 and SENSEX are again at record high levels and making the headlines look merrier. However, the broader investor sentiment is telling a different story. Despite the markets hitting record highs, investors don't seem to be in a mood for cheer and celebration as their individual portfolios are lagging behind the benchmarks. While NIFTY50 is up over 10% in 2025, the retail investors’ portfolios are struggling to beat the benchmarks. Retail investors who entered the capital markets post-2020 are finding themselves in a paradoxical situation where markets are back to record highs, but their portfolios aren’t. Is this the case with your portfolio, too? Here’s why.
Narrow rally
The current rally of NIFTY50 to record high levels is highly skewed towards a handful of stocks. NIFTY50 has rallied over 2,000 points in the last year, primarily led by the top eight stocks like HDFC Bank, Reliance, Bharti Airtel, ICICI Bank, L&T, ITC, Infosys and SBI. The periodic high and low data from Stockedge indicate that 28 stocks out of 50 are still trading in the low-to-mid zone. As we delve deeper into the broader indices, the market breadth remains more skewed towards the low and mid-range zone. Out of the NIFTY Smallcap 250 index, 146 stocks are in the mid-range zone and 75 stocks are in the low-range zone, and only 29 are in the high zone. Similarly, from the NIFTY500 index, only 100 stocks are trading in their periodic high zone, while 289 are in the mid-range and 111 are in the low range zone.
Equity mutual funds also underperform
According to Value Research, a mutual fund analysis platform, the majority of the equity mutual fund category schemes are underperforming their benchmark indices on a yearly horizon. Here is how major equity mutual fund categories are performing on a 1-year time horizon.
| Category | 1-year returns | 1-year benchmark returns |
|---|---|---|
| Largecap | 6.5% | 8.6% |
| Large & Midcap | 1.9% | 7.6% |
| Flexicap | 3.3% | 6.2% |
| Multicap | 2.3% | 3.4% |
| Midcap | 4.4% | 5.0% |
| Smallcap | -4.4% | -4.9% |
Skewed market breadth
The NIFTY50’s record rally has boosted optimism around all the index participants, leading to renewed investor interest in the top 50 stocks. Thus, more than 80% of the stocks are now trading above the 200 SMA. The 200 SMA level is considered a crucial gauge for assessing long-term sentiment for the underlying stocks. At the broader level, the NIFTY500, NIFTY Midcap 150, and NIFTY Smallcap 250 indices show a grim picture with the majority of the stocks trading below the 200 SMA levels.
Among the NIFTY500, 49% of the stocks still continued to trade below 200 SMA levels and 51% above it. In the NIFTY Midcap 150 index, 56% of the stocks traded above 200 SMA levels. Meanwhile, NIFTY Smallcap 250 showed more weakness and loss of momentum, as only 43% of the stocks traded above the 200 SMA levels.
In conclusion, as the data reveals, the current rally to a record high is not broad-based, with the majority of the stocks still trading in the mid or low zone. Amid external headwinds like tariffs, rupee depreciation, FII selling, investors diversified their portfolios towards large caps, leading to a sustained rally in large caps. While small caps remain under pressure in the absence of fresh buying impetus, it further adds to overall underperformance in the category.
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