It's a multi-horse Street race now as Smids muscle in

For years, India’s stock market ran on the shoulders of a few giants. Not anymore.

- Mayur Bhalerao

Trading activity and institutional money are now spreading across the widest set of companies in nearly a decade, with market concentration gauges such as the Herfindahl-Hirschman Index, or HHI, falling sharply from their pandemic highs and signalling a structural broadening of who gets attention and capital.

The market-cap-based HHI for the National Stock Exchange (NSE) peaked at an 11-year high of 173 in March 2020, when pandemic uncertainty funnelled money into the most liquid large-caps. By October 2025, it had eased to 80, the lowest since March 2018, reflecting a broadening of ownership and liquidity.

The HHI is calculated by squaring each entity's market share and adding up the results. It ranges from near zero in a perfectly competitive market to 10,000 in a pure monopoly.

In equity markets with thousands of tradable stocks, even small changes in HHI are meaningful: lower scores indicate dispersed liquidity, while higher ones signal clustering around a few influential names.

Regulatory thresholds place scores below 1,500 in the “competitive” zone, 1,500-2,500 in “moderate concentration,” and above 2,500 in “high concentration.” Absolute values in equities rarely approach these levels, but directionally, a decline signifies a healthier spread of activity.

That trend is most visible in headline indices. The Nifty 50 remains the tightest cluster, with an HHI of 363, slightly higher than 354 a month earlier but well below its March 2009 peak of 476. The Nifty Next 50 stands at 252. Beyond the large-caps, concentration collapses: mid-small and micro-cap HHIs sit near multiyear lows at 77, 47 and 47, respectively.