Investors have become very selective about picking stocks. In fact, they are betting on just 10% of stocks out of the total traded counters. Consequently, while benchmark indices have fallen by up to 10% from their 52-week highs, 90% are trading much below that.
That is, over 4,400 stocks — about 90% of the total traded counters — are currently trading 10% to 96% below their respective 52-week highs, thereby significantly underperforming the benchmark indices, according to data from Capitaline.
Only 376 have fallen less than 10% and just 98 stocks are trading at their one-year highs, including Eternal (formerly Zomato), Sterlite Technologies, and SML Isuzu.
At the same time, the benchmark Sensex and Nifty are down 6.10% and 6.04%, respectively, from their one-year highs (September 2024). The broader BSE Midcap and BSE Smallcap indices are trading 9.36% and 10.25% below their 52-week highs.
Caution on Valuations and Earnings
Saurabh Mukherjea, founder of Marcellus Investment Managers, noted that over the past three years, the share prices of many small-cap and mid-cap stocks have doubled without a commensurate improvement in their fundamentals.
He believes the prudent approach for investors is to stick to high-quality large-cap stocks trading at sensible valuations. Marcellus’ portfolios currently hold large positions in HDFC Bank and Asian Paints.
Echoing similar views, Siddarth Bhamre, head of research at Asit C Mehta said, “Our thought process is not very constructive on the market, at present. A lot of liquidity is pumping markets but because earnings are not great, valuations are becoming expensive.”
He added that in the last two years the market has not gone anywhere and mutual fund investors have not made substantial absolute returns, as well.
Sectors and Stocks Under Pressure
Data sourced from Capitaline shows that 1,055 shares are trading 50%–96% lower from their one-year highs, another 1,903 stocks are down 30%–49%, 837 are down 20%–29%, 643 are down 10%–19%.
Ola Electric (down 74% from its 52-week high), Raymond Lifestyle, Sterling Wilson, Vodafone Idea, Tejas Networks, and Adani Green Energy are among the prominent companies whose shares are currently 50%–74% below their one-year highs.
Among sectors, IT, realty, and oil are trading 19.2%–24.4% below their one-year highs, while consumer durables, auto, and metals are down 11%–16%. Pharma, healthcare, banking, and financial services have performed relatively better, trading up to 7.3% below their respective 52-week highs.
Between September 2024 and August 2025, foreign portfolio investors sold shares worth ₹1.62 lakh crore, while domestic institutional investors provided strong support to the markets, purchasing shares worth ₹6.92 lakh crore.