Why your portfolio is bleeding despite Sensex nearing record high
What's the story
India's stock market is witnessing a contraction, with many retail investors disappointed by their portfolio returns. This comes even as the BSE benchmark Sensex nears its all-time high. The disparity can be attributed to broader market weakness, where a large number of stocks have declined by 20-60% in the last year. This indicates that the bear-market grip is still strong despite headline indices remaining resilient.
Analysis
Over 100 stocks in bear-market territory
A stock is said to be in a bear market if it has fallen by 20% or more. Within the BSE 500 index, over 100 stocks are in this category. Data from Capitaline shows that out of the BSE 500 pack, 285 stocks are trading with cuts, with as many as 112 down over 20%. This stark contrast highlights the market's narrowing breadth despite headline indices staying resilient.
Stock performance
Praj Industries and Tejas Networks among worst performers
Praj Industries has emerged as the worst performer, losing 60% in a year to ₹329.55 per share. Tejas Networks follows closely with a 59% decline in the same period. Other heavily impacted shares include Vedant Fashions, KNR Constructions, Ola Electric, Brainbees Solutions, and Sterling & Wilson, all of which have lost over 50%. This broader market weakness points to a lack of sector-specific trends driving these declines.
Pressure
Mid-cap and small-cap stocks under pressure
Analysts say that mid-cap and small-cap stocks are under the most pressure. This is because most high-net-worth individuals (HNIs) and retail investors have a higher allocation to these segments, which is hurting their portfolios. Harshal Dasani, Business Head at INVAsset PMS, explains that "the headline indices are being driven by a handful of large, predictable businesses with strong cash flows."
Forecast
Analysts predict narrow leadership trend to continue
Analysts expect the narrow leadership trend to continue for some time, especially in a regime where liquidity is concentrated and earnings visibility favors a select few. This divergence could indicate fatigue or maturation of the bull market. Independent market analyst Ambareesh Baliga says the weakness is broad-based across sectors because mid- and small-caps exist across all industries.
Market expectations
Sensex to reach 95,000-107,000 by end of 2026
Nitin Jain, Senior Analyst at Bonanza, said there's a high probability of a broadening rally beyond narrow leadership in the Sensex. He expects it could reach between 95,000 and 107,000 by the end of 2026. This would imply an upside potential of roughly 13-26% from current levels. "Domestic factors such as policy reforms, infrastructure progress and robust consumption further bolster this case," he added.