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NIFTY50, SENSEX at record high, but your portfolio isn't keeping pace; here is why
3 min read | Updated on December 02, 2025, 10:37 IST
SUMMARY
NIFTY50 and SENSEX are hitting record highs, but the individual portfolios are struggling and lagging in the rally. As investors shift their focus towards large caps, the small caps and midcap stocks continue to face a dearth of buying power and momentum. The majority of the equity mutual fund categories also underperformed their respective benchmark
80% of the NIFTY50 stocks trade above 200 SMA levels vs while less than 50% of smallcaps traded below 200 SMA. Image resource: Shutterstock
NIFTY50 and SENSEX are again at record high levels and making the headlines look merrier. However, the broader investor sentiment is showcasing a totally paradoxical situation. Despite the markets hitting record highs, investors are not in a mood of cheer and celebration as their individual portfolios are lagging behind the benchmarks. While NIFTY50 is up over 10% in 2025, the retail investor portfolios are struggling to beat the benchmarks. Retail investors who entered the capital markets post-2020 are finding themselves in a paradoxical position where markets are back to record highs, but their portfolios aren’t. Is this the case with your portfolio, too? Here’s why.
Narrow rally
The current rally of NIFTY50 to record high levels is highly skewed towards a handful of stocks. NIFTY50 has rallied over 2000 points in the last year, with the majority of the gains primarily led by the top eight stocks like HDFC Bank, Reliance, Bharti Airtel, ICICI Bank, L&T, ITC, Infosys, and SBI led for majority of the gains. The periodic high and low data from the Stockedge platform indicate 28 stocks out of 50 are still trading in the low-to-mid zone. As we delve deeper into broader indices, the market breadth remains more skewed towards the low and mid-range zone. Out of the NIFTY Smallcap 250 index, 146 stocks are in the mid-range zone and 75 stocks are in the low range zone, and only 29 are in the high zone. Similarly, from the NIFTY500 index, only 100 stocks are trading in their periodic high zone, while 289 are in the mid-range and 111 are in the low range zone.
Equity mutual funds also underperform
According to Value Research, a mutual fund analysis platform, the majority of the equity mutual fund category schemes are underperforming their benchmark indices on a yearly horizon. Here is how major equity mutual fund categories are performing on a 1-year time horizon.
| Category | 1-year returns | 1-year benchmark returns |
|---|---|---|
| Largecap | 6.5% | 8.6% |
| Large & Midcap | 1.9% | 7.6% |
| Flexicap | 3.3% | 6.2% |
| Multicap | 2.3% | 3.4% |
| Midcap | 4.4% | 5.0% |
| Smallcap | -4.4% | -4.9% |
Skewed market breadth
The NIFTY50’s record rally has boosted optimism around all the index participants, leading to renewed investor interest in the top 50 stocks. Thus, more than 80% of the stocks are now trading above the 200 SMA. The 200 SMA level is considered a crucial gauge for assessing long-term sentiment for the underlying stocks. At the broader level, NIFTY500, NIFTY Midcap, and Smallcap indices show a grim picture with the majority of the stocks trading below the 200 SMA levels.
Among the NIFTY500, 49% of the stocks still continued to trade below 200 SMA levels and 51% above it. In the NIFTY Midcap 150 index, 56% of the stocks traded above 200 SMA levels. Meanwhile, NIFTY Smallcap 250 showed more weakness and loss of momentum, as only 43% of the stocks traded above the 200 SMA levels.
In conclusion, as the data reveals, the current rally to a record high is not broad-based with the majority of the stocks still trading in the mid or low zone. Amid external headwinds, investors diversified their portfolios towards large caps, leading to a sustained rally in large caps. While smallcaps remain under pressure in the absence of fresh buying impetus further adding to overall underperformance in the category.
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