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Investor confidence appears to be on the upswing, with more stocks in the Indian market trending closer to their 52-week highs than lows, according to a recent market update by PL Capital. The report signals a notable improvement in overall market sentiment and suggests growing participation beyond a handful of heavyweight stocks.

“Market sentiment has improved — with more stocks closer to 52w Highs than Lows,” PL Capital stated in its findings.

The data shows that around 30 per cent of listed stocks are now trading near their 52-week peaks, a significant turnaround from previous lows. While this figure still trails the levels recorded in June last year, it reflects a clear recovery from earlier periods of weaker performance.

Market Breadth On The Rise

A key indicator highlighted in the report is the rolling return spread between the Nifty 500 equal-weight index and the traditional market-cap-weighted Nifty 500 index. The widening spread, which is rising from a cyclical low, points to improving market breadth—meaning more stocks, beyond just the large caps, are contributing to overall market gains.

A rising spread in equal-weighted returns suggests that the rally is not confined to a few high-performing companies. Instead, gains are becoming more evenly distributed across a wider array of stocks, typically a healthy sign for the broader market.

No Clear Leadership Among Investment Styles

The report also examined one-year return spreads across various investment factors—such as value versus quality, small-cap versus large-cap, and momentum versus low-volatility strategies. The analysis revealed that these spreads remain narrow, indicating no particular investment style is currently leading the market.

“Narrow factor spreads don't indicate any style polarisation, hinting that a balanced, multifactor approach is better suited in consolidating markets,” the report noted.

Key Takeaways For Investors

PL Capital’s analysis pointed to three major developments shaping the market outlook:

• A noticeable improvement in sentiment, with more stocks trading closer to their annual highs. 
• Strengthening participation across the broader market, as reflected in equal-weight index performance. 
• Balanced performance across investment styles, underscoring the value of diversification in the current phase.