Indian markets pass ‘extreme stress zone’ offering attractive entry points: Report

MUMBAI: Market breadth shows that domestic stock indices have passed an “Extreme Stress Zone” and marked a rewarding entry point for investors with a historical median one‑year forward return of over 17.5 per cent, a report said on Saturday.

'Extreme Stress Zone' is reached when over 70 per cent of Nifty 500 stocks trade below their 200‑day moving average and it indicates that fear has overwhelmed fundamentals in the markers, the report from Vallum Capital said.

Indian markets are in the 'Extreme Stress Zone' or 'Capitulation Zone' as over 71.3 per cent of Nifty 500 stocks are trading at this level.

The report said that the recent correction has seen a clear divergence in risk sentiment across market caps with small‑caps underperforming large‑caps by more than 1,000 basis points, with about 61 per cent of those stocks down over 10 per cent and median returns at ‑17 per cent.