More Stocks Are Slipping Towards Their Lows
Participation is weakening, and nearly half the basket is more than 30% below its all-time high.
The Nifty 500 is sliding lower, and the weakness underneath is becoming harder to ignore. More stocks are gathering near the bottom of their 52-week ranges, while fewer are holding near the top.
The 52-week range indicator tracks where stocks sit between their yearly low and high. When participation is healthy, we want to see more stocks moving towards the upper end. Right now, the balance is moving the other way: the lower-end group is expanding as the upper-end group shrinks.
Deep drawdowns are becoming more widespread
The share of stocks trading more than 30% below their all-time highs is rising towards half the basket. That is a substantial amount of damage beneath the index.
These two measures look at different things. A stock’s position within its 52-week range shows where it stands relative to the past year. Its drawdown from an all-time high measures the distance from its highest price, which may have been reached much earlier. Both are pointing towards broader weakness here.
During the stronger advance visible earlier in the chart, participation near the upper end of the yearly range expanded and the share of stocks in deep drawdowns fell. The latest move shows the opposite: fewer stocks near the top, more near the bottom, and more slipping into deep drawdowns.
A bounce still needs broader support
My view remains bearish. There is no convincing sign of broad relief yet. Sharp upward moves can still happen during a bearish phase, but a few strong sessions would not undo this deterioration.
For a recovery to become more credible, the lower-end group needs to stop expanding. More stocks need to move back towards the upper part of their ranges, and the share sitting more than 30% below their all-time highs needs to turn down. That improvement needs to last beyond the first bounce.
For now, breadth remains very weak. A short-term rally is possible; a sustained recovery still needs evidence of broader participation.
Lovelesh Sharma SEBI Registered RA · INH000027937 CMT, CFTe
For educational purposes only. This is not investment advice.
