All told, 23 Nifty stocks are languishing at least 10 percent below their all-time highs. In the broader market, the damage is even greater, with the BSE Smallcap index remaining 5 percent lower in 2025 and unable to recoup its losses, while the Midcap index is barely 2 percent higher.Also read | Sensex, Nifty hit record highs: Is India’s 2026 super cycle about to begin?
“Most stocks are still languishing 20-30% below the highs. The rally is limited to a few largecap companies. The mood is not very upbeat. Retail portfolios are stuck in midcap and smallcap stocks,” Sunny Agarwal of SBI Securities told ET Markets. “Broader market participation will only improve as primary market supply declines. But it appears this won’t happen anytime soon as IPO supply looks very strong in December as well.”
The IPO frenzy is cannibalizing the secondary market. India’s retail investors have seen a dramatic exodus, selling Rs 4,729 crore worth of shares in FY26, marking their worst selling streak since FY19, while pumping in as much as Rs 30,000 crore into the booming IPO market during the same period. Individual investors are selling existing investments to chase listing profits, ignoring concerns around startup founders and companies benefiting from the IPO frenzy at rich valuations.
Agarwal warned that “market valuations are still high. There is overvaluation in the pocketbook, and hence one has to be selective.”
“Global and Indian yields are likely to fall more than expected, leading to a bond rally and possibly a stronger rupee,” said Vikram Kasat, head of advisory at PL Capital. “Liquidity will rise, which will support equities in the short term, while inflation risks remain a concern only in the longer term.”
Dr. Pointing out potential catalysts going forward, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said: “The technical construct of the high FII short market is also favorable for a rally. Importantly, the rally will get fundamental support from the potential earnings growth expected in the third and fourth quarters of FY26. October’s consumption boom will translate into impressive earnings growth.”
But he tempered expectations, warning that “there is no room for a sharp, sustained uptrend as valuations do not support it.” He noted that expectations of a Fed rate cut and a possible peace deal between Russia and Ukraine have improved sentiment in global stock markets. He added that “Bank Nifty fundamentally has the strength to support a rally to a new all-time high.”
Also read | Rs 30,000-crore IPO gold rush triggers worst selling by retail investors since FY19
Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking, cautioned against caution: “Given the prevailing volatility and global uncertainty, traders are advised to take a selective buy-on-dips approach, manage leverage prudently and use tight trailing stop-losses with staggered profit bookings. New long positions can only be considered on a sustained move above 26,300, supported by careful monitoring of global signals and key technical levels.”
The message from Dalal Street is clear: the benchmark bonanza masks a distressed market, where concentration risk has reached extreme levels, and retail investors are betting on IPO lots instead of holding quality stocks. Until this rally expands beyond the chosen few, it would be premature, if not foolhardy, to call it a bull market.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
#Sensex #Nifty #record #highs #bull #market