The breadth of the ongoing market rally is narrowing with the number of stocks generating positive returns within the Nifty500 universe decreasing from 452 in Q1FY24 to 268 in Q4FY24, according to Motilal Oswal Private Wealth.

In the March quarter, 70% of largecap stocks generated positive returns vis-a-vis 57% of midcap and 45% of small caps, the report said.

“The domestic equity market is witnessing in terms of performance of market “Shifting Tides” capitalizations, sectoral performance and equity mutual funds inflows,” said Ashish Shanker, MD and CEO at Motilal Oswal Wealth Limited.

The report said that between April 2023 to January 2024, around 47% of the Nifty500 universe generated more than 50% returns & nearly 20% of the universe more than doubled their stock prices. Most of this action was witnessed in mid and smallcap categories. This led to valuations (Price/Earning ratio) within these categories trending much higher than their respective long-term (10-year) averages, leading to expectations of shifting tides.