Broader Market Indicators Key To Understanding The Market Mood

The strength of the markets can be gauged by using several tec indicators. Investors at any point of time would always want to if it is a ‘good time’ to invest in the equity markets. Market brea positive is one such indicator that prompts investors to increase allocation to equity markets as the chances of winning in them increases manifold. Yogesh Supekar discusses what exactly is m breadth and how does one ascertain if the market breadth is increasing even as Karan Bhojwani with the help of expert com attempts to highlight technical indicators that can help analyse market breadth objectively

- Yogesh Supekar and Karan Bhojwani

Any investor before investing in the equity markets has some basic questions which need answers. ‘Is the market going to do well? What kind of returns should I expect from the markets? Will my portfolio grow?’ These are the most rooted and quintessential questions an investor attempts to find answers to. The common perception is that if the Sensex (market) does well, the portfolio will also do well. However, in practical terms, investors may face a situation at times when the markets do well but their portfolio or wealth does not grow. When we say markets, it must be understood that we are referring to the Sensex or Nifty – experts call them the benchmark indices.

The year 2018 was especially an eye-opener for investors when the key benchmark indices inched up while a majority of investors struggled to generate positive returns in their respective portfolios. What went wrong for investors? Was it the portfolio management strategy that went awry or was it the stock selection that went wrong? The highlight of the markets in 2018 was the missing ‘market breadth’ and that triggered underperformance for most investors’ portfolios and the performances of the mutual funds. What exactly is the market breadth and how does one quantify it? Why is it essential to track market breadth?