{"id":5175,"date":"2025-03-11T16:57:35","date_gmt":"2025-03-11T11:27:35","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=5175"},"modified":"2025-05-23T15:46:20","modified_gmt":"2025-05-23T10:16:20","slug":"market-weakness-continues-as-only-10-of-nifty-500-stocks-trade-above-200-dma","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/market-weakness-continues-as-only-10-of-nifty-500-stocks-trade-above-200-dma\/","title":{"rendered":"Market Weakness Continues as Only 10% of Nifty 500 Stocks Trade Above 200-DMA"},"content":{"rendered":"<p data-start=\"89\" data-end=\"419\">The Indian equity markets are witnessing broad-based valuation declines as stocks adjust to a slowdown in earnings growth. According to a recent DSP report, only 10% of Nifty 500 stocks are currently trading above their 200-day moving average (DMA)\u2014a key technical indicator that signals market momentum.<\/p>\n<p data-start=\"421\" data-end=\"587\">Additionally, 155 stocks have hit new 52-week lows, but historical trends suggest stability typically emerges when over 200 stocks reach this level.<\/p>\n<h3 data-start=\"589\" data-end=\"633\">Market Signals from the Report<\/h3>\n<ul data-start=\"635\" data-end=\"1351\">\n<li data-start=\"635\" data-end=\"844\">Volatility Index (VIX) remains low: Despite a 16% drop in the Nifty 50 index, the low VIX suggests that investor fear hasn\u2019t peaked yet, indicating the market may not have bottomed out.<\/li>\n<li data-start=\"845\" data-end=\"1177\">Price-to-Book (P\/B) Ratio Trends:\n<ul data-start=\"889\" data-end=\"1177\">\n<li data-start=\"889\" data-end=\"1023\">33% of stocks in the Nifty MidSmall 400 Index are now trading below a 3x P\/B ratio, compared to 25% in September 2024.<\/li>\n<li data-start=\"1026\" data-end=\"1177\">Large-cap valuations are near historical averages, with the Nifty 50 P\/E ratio falling below 20x and P\/B ratio at 3.3x (long-term average).<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"1178\" data-end=\"1351\">Market Cap-to-GDP Ratio:\n<ul data-start=\"1213\" data-end=\"1351\">\n<li data-start=\"1213\" data-end=\"1351\">Remains slightly above its historical trend, suggesting further corrections might be needed for a stronger investment opportunity.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 data-start=\"1353\" data-end=\"1403\">Small &amp; Midcap Stocks: Still Overvalued?<\/h3>\n<ul data-start=\"1405\" data-end=\"2258\">\n<li data-start=\"1405\" data-end=\"1843\">\n<p data-start=\"1407\" data-end=\"1454\">SMIDs (Small &amp; Midcaps) remain expensive:<\/p>\n<ul data-start=\"1457\" data-end=\"1843\">\n<li data-start=\"1457\" data-end=\"1583\">Median TTM P\/E for SMIDs is at 33x, down from 46x in early 2024, but still above the long-term average of 20x.<\/li>\n<li data-start=\"1586\" data-end=\"1701\">SMID earnings underperformed large caps for two consecutive quarters due to domestic economic slowdown.<\/li>\n<li data-start=\"1704\" data-end=\"1843\">Excluding Banking and Financial Services (BFSI), small and midcap earnings contracted YoY\u2014a major reversal from previous years.<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"1845\" data-end=\"2258\">\n<p data-start=\"1847\" data-end=\"1888\">Inflows into Small Caps Could Slow:<\/p>\n<ul data-start=\"1891\" data-end=\"2258\">\n<li data-start=\"1891\" data-end=\"2027\">Mutual Fund flows into small &amp; midcap stocks reached 8.2% of their free float over the last 12 months, fueling excess valuation.<\/li>\n<li data-start=\"2030\" data-end=\"2154\">Small cap assets held by active equity funds surged 10x since March 2020, compared to a 4x growth in large caps.<\/li>\n<li data-start=\"2157\" data-end=\"2258\">As returns soften, incremental flows to small caps may decline, reducing valuation froth.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 data-start=\"2260\" data-end=\"2296\">What\u2019s Next for Investors?<\/h3>\n<ol data-start=\"2298\" data-end=\"2918\">\n<li data-start=\"2298\" data-end=\"2451\">Wait for Stability: The report advises that further downside risks exist for small &amp; midcaps before they reach a stable investment zone.<\/li>\n<li data-start=\"2452\" data-end=\"2764\">Adopt a Moderate Investment Stance: Now is not the time to be aggressive\u2014investors should gradually raise equity exposure through:\n<ul data-start=\"2603\" data-end=\"2764\">\n<li data-start=\"2603\" data-end=\"2675\">Hybrid funds (Dynamic Asset Allocation, Multi Asset Allocation).<\/li>\n<li data-start=\"2679\" data-end=\"2764\">Staggered purchases in large caps via SIPs (Systematic Investment Plans).<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"2765\" data-end=\"2918\">Small &amp; Midcaps Need More Corrections: Given high valuations, investors should wait for further corrections before making major allocations.<\/li>\n<\/ol>\n<h3 data-start=\"2920\" data-end=\"2941\">Bottom Line<\/h3>\n<p data-start=\"2943\" data-end=\"3275\" data-is-last-node=\"\" data-is-only-node=\"\">The market correction has improved large-cap valuations, but small &amp; midcaps remain overvalued. With the VIX still low, further market corrections are likely before a recovery. Investors should stay cautious, focus on large caps, and use staggered investments rather than making aggressive moves into small caps.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian equity markets are witnessing broad-based valuation declines as stocks adjust to a slowdown in earnings growth. According to a recent DSP report, only 10% of Nifty 500 stocks are currently trading above their 200-day moving average (DMA)\u2014a key technical indicator that signals market momentum. Additionally, 155 stocks have hit new 52-week lows, but [&hellip;]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-5175","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=5175"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5175\/revisions"}],"predecessor-version":[{"id":5177,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5175\/revisions\/5177"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/5176"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=5175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=5175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=5175"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=5175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}