Hidden Weaknesses Beneath the Nifty Rally: 12 Stocks Down Over 50% and the Risk Indian Traders Can’t Ignore

Hidden Weaknesses Beneath the Nifty Rally: 12 Stocks Down Over 50% and the Risk Indian Traders Can’t Ignore

When the headline index looks calm, it’s easy to believe the whole market is healthy. But Indian rallies often have a tell: the Nifty can hover near a 52-week high while a large part of the market quietly bleeds. In early January 2026, that gap was stark—Nifty 50 was about 0.7% below its 52-week high (26,373) and Nifty 500 about 0.5% below, yet a big slice of Nifty 500 names sat far under their own peaks, revealing how concentrated the “rally” really was.

That’s the uncomfortable truth beneath many “all-time-high” screenshots: index strength can be carried by a narrow set of heavyweight winners, while dozens (or hundreds) of stocks are already in drawdowns that feel like a bear market to anyone holding them. In this same dataset, nearly 145 Nifty 500 stocks were down 25%–75% from their yearly highs, even as the broader benchmark barely flinched.

And then come the numbers that should make any trader sit up straight: 12 Nifty 500 stocks were down more than 50% from their 52-week highs. Not penny names in obscure corners—these are recognizable stocks that, at some point in the last year, the market priced far more optimistically than it does now.

Here’s what that “hidden weakness” looked like, stock by stock (prices and peaks as reported in the dataset): Aditya Birla Fashion and Retail fell about 74% to ~₹77 from ~₹295.70 (high on May 19, 2025); Covance Lifesciences dropped 62% to ~₹502 from ~₹1,328 (high on Feb 20, 2025); Tejas Networks slid 62% to ~₹445 from ~₹1,176.10 (high on Jan 7, 2025); Praj Industries declined 61% to ~₹324 from ~₹828.55 (high on Jan 7, 2025). Vedant Fashions was down 56% to ~₹564 from ~₹1,282.35 (high on Jan 8, 2025); Newgen Software Technologies down 54% to ~₹822 from ~₹1,798.90 (high on Jan 15, 2025); Reliance Power down 54% to ~₹35 from ~₹76.49 (high on Jun 11, 2025). Brainbees Solutions down 53% to ~₹291 from ~₹619.90 (high on Jan 7, 2025); Valor Estate down 53% to ~₹120 from ~₹252.67 (high on Jul 9, 2025); Whirlpool of India down 52% to ~₹878 from ~₹1,824.95 (high on Jan 7, 2025). Transformers & Rectifiers (India) down 51% to ~₹315 from ~₹648.90 (high on Jan 8, 2025); and Kaynes Technology India down 51% to ~₹3,791 from ~₹7,705 (high on Oct 7, 2025).

Read that again and notice the pattern: many of these peaks cluster around early 2025—classic “hot phase” behavior—followed by sustained repricing. A 50% fall isn’t just a bad week; it’s the market rewriting its assumptions. And the most dangerous part is psychological: the index keeps you emotionally anchored. If Nifty looks strong, you tell yourself your stock will “catch up.” If it doesn’t, you average down because the crowd narrative says “bull market.” Meanwhile, your position is busy teaching you what concentration risk and theme risk feel like in real money.

This is where traders (especially newer ones) get trapped: they confuse index trend with portfolio health. The Nifty is market-cap weighted—heavyweights dominate its direction. So a handful of winners can mask widespread damage underneath. That’s why breadth indicators matter. One snapshot from late 2025 put it plainly: only ~40% of Nifty 500 stocks were above their 50-day simple moving average, a sign that the average stock wasn’t participating the way the index headline implied.

So what do you do with this information if you’re an Indian trader trying to stay alive (and sane) through rallies, reversals, and “everything is fine” headlines?

You start by treating “market is up” as incomplete information. Ask a second question immediately: How many stocks are actually trending up? If breadth is weak, you should assume that stock selection risk is high—meaning the penalty for being wrong on a single name is much bigger than usual. This is exactly the environment where traders get chopped: some names break out, many fail, and your confidence gets whipsawed because the index never explains what happened to you.

Next, respect drawdowns as data, not drama. A stock down 50% is not “cheap” by default; it’s “down 50%.” Price is not value, and momentum is not a moral judgment. If you trade technically, a 50% slide usually means the market has spent months distributing supply and rejecting higher prices. If you invest fundamentally, it may mean earnings expectations changed, the balance sheet became scarier, or growth got repriced. Either way, your job is the same: identify what would need to be true for the trend to reverse—and then demand evidence, not hope.

Then, tighten your risk process in exactly the places where Indian traders tend to loosen it: leverage, averaging down, and “one more lot.” When breadth is weak, breakouts are less reliable and rebounds are more violent. Keep position sizes smaller than your ego wants. Use predefined invalidation levels (a stop or a mental stop you actually follow). If you average, do it only with a rule (for example, averaging only after trend reversal signals, not during freefall). And if you’re trading derivatives, remember that drawdowns can compound faster than you expect when volatility expands.

Also, diversify your thesis—not just your tickers. Holding five stocks that all depend on the same narrative (a single theme, a single cycle, a single sentiment pocket) isn’t diversification; it’s one big bet wearing different clothes. In the “hidden weakness” kind of market, that’s how you end up feeling blindsided: all your positions start moving together—down.

Finally, keep a simple “rally reality check” list on your phone before you add risk:

• Is the index up because of a few heavyweights, or is the average stock participating? (Use breadth/advance-decline, % above key moving averages.)
• Is your stock making higher highs and higher lows, or just bouncing inside a downtrend?
• If the stock is down 40%–60% from highs, what’s your specific trigger for re-entry—and what’s your invalidation?
• If you’re wrong, how much will you lose (rupees, not feelings)?
• If you’re right, is your upside realistic, or are you anchoring to the old high because it’s comforting?

The market will always have “12 stocks down 50%” somewhere, even during feel-good phases. The lesson isn’t that these names are untradable forever; it’s that headline indices can lie by omission. The real skill for Indian traders is learning to read what the rally is hiding—and then adjusting your risk so you’re not the one funding the lesson.