Even though the Nifty has crossed the 26,000 mark and the BSE Sensex has crossed 86,000 — signalling overall market strength — many individual investors find their personal portfolios underperforming.
What’s Causing the Disconnect?
- Index gains driven by a few large-caps: The rally is largely powered by a handful of heavyweight stocks. Because the index gives large weight to big-cap companies, strong performance from these few can push the Nifty up — even if most other stocks struggle.
- Weak mid- and small-cap performance: Many small- and mid-cap stocks — segments where retail investors often have exposure — continue to lag. As a result, gains in large-caps don’t translate into similar returns across a typical diversified retail portfolio.
- Narrow market participation, poor breadth: The overall market breadth is weak. Even though the index is up, a large number of stocks remain in the red — dragging down actual portfolio returns for many investors.
- Investor expectations vs reality: Some investors may have expected broad-based gains and allocated heavily toward growth- or mid/small-cap stocks. When those sectors underperform, the disparity becomes obvious — despite headline index highs.
What This Means for Investors
- A rising index doesn’t guarantee gains for every investor — much depends on what kind of stocks you hold.
- If your holdings are skewed toward mid- or small-caps (or non-heavyweight names), you may see lacklustre performance — even when the market appears to be doing well.
- For most retail investors, a diversified portfolio — rather than over-concentration in a few high-flying stocks — remains the safer approach.
- As long as market participation is narrow and gains remain concentrated, many portfolios will continue to underperform despite index rallies.
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