World-Beating Stock Market Rally Is Narrowing Fast, Charts Show

The NSE Nifty Smallcap 250 Index has plunged 8.6% so far in August, on course for the first monthly drop since October. The NSE Nifty Midcap 150 Index has lost 3.1%.

As India's world-beating stock rally powers ahead, skeptics are pointing to lousy market breadth as a sign that further gains may be harder to come by. The NSE Nifty 200 Index has more than doubled from a March 2020 low -- weathering alarming Covid-19 infection and death rates, strict lockdowns and slower economic growth -- thanks to a massive liquidity boost from the central bank and foreign inflows. Gauges of small- and mid-cap shares have climbed a lot more amid the broad surge. Since the end of July, however, measures of red-hot small and midcap shares have slumped and just a bunch of heavyweights have been keeping the largecap rally alive. Below are three charts capturing the changing trend: