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The Advance Decline Ratio (ADR) is a market breadth metric that reflects how widely stock price movements are distributed across the market during a trading session.
Last updated on: February 13, 2026
Market indices often highlight headline performance, but they do not always reveal how many stocks are participating in a move. The Advance Decline Ratio (ADR) is used to observe market breadth by tracking the balance between rising and falling stocks, offering additional context on overall participation levels during a trading session.
The Advance Decline Ratio (ADR) measures the relationship between advancing and declining stocks over a defined period, providing insight into whether price movements are supported by broad market participation or driven by a limited set of stocks. Unlike index values alone, ADR highlights internal market dynamics that may not be immediately visible in headline benchmarks such as the Nifty or Sensex.
Short-term changes in ADR can indicate shifts in participation patterns, particularly when index levels remain firm while signals from breadth indicators and the Nifty 50 option chain point to narrower market involvement.
The Advance/Decline Ratio (ADR) is calculated by comparing the number of stocks that close higher with those that close lower during a specific trading session.
ADR = Number of Advancing Stocks ÷ Number of Declining Stocks
Advancing stocks are securities that close above their previous trading day’s price.
Declining stocks are securities that close below their previous trading day’s price.
An ADR above 1 indicates that advancing stocks outnumber declining stocks, while a value below 1 reflects broader declines.
Assume that on a particular trading day:
900 stocks close higher
600 stocks close lower
ADR = 900 ÷ 600 = 1.5
In this scenario, the ratio of 1.5 shows that more stocks advanced than declined during the session, indicating relatively broader participation on the positive side of the market.
The Advance Decline Ratio reflects how broadly market movements are distributed across listed stocks, offering context beyond headline index performance.
ADR provides a snapshot of overall market mood by showing whether advancing stocks outnumber declining ones during a trading session.
The ratio highlights how widespread participation is, indicating whether price movements are supported by many stocks or driven by a limited group.
ADR is derived by dividing the number of advancing stocks by the number of declining stocks over a defined period.
Values above 1 indicate more advancing stocks, while values below 1 reflect a higher number of declining stocks.
Tracking ADR across multiple sessions helps assess whether market momentum is strengthening or weakening over time.
Short-term ADR readings can differ from longer-term trends, with weakening participation sometimes observed after strong readings.
These divergences highlight differences between index direction and underlying stock participation.
The Advance Decline Line (A-D Line) is a cumulative market breadth indicator that tracks the net difference between advancing and declining stocks over time. Unlike the Advance Decline Ratio, which shows a snapshot for a single session, the A-D Line builds on prior values to reflect broader participation trends across multiple trading days.
It is used to observe whether market strength or weakness is supported by a wide base of stocks or concentrated in a limited set.
On any given trading day, the A-D Line is calculated as:
A-D Line (Today) = A-D Line (Previous Day) + (Number of Advancing Stocks − Number of Declining Stocks)
Where:
Advancing stocks are those closing higher than the previous session
Declining stocks are those closing lower than the previous session
The first day typically starts with a base value of zero.
| Day | Advancing Stocks | Declining Stocks | Net Advances (Adv − Dec) | Cumulative A-D Line |
|---|---|---|---|---|
Day 1 |
520 |
480 |
40 |
40 |
Day 2 |
450 |
550 |
−100 |
−60 |
Day 3 |
600 |
400 |
200 |
140 |
Day 4 |
530 |
470 |
60 |
200 |
In this example, the A-D Line rises to 200 by Day 4, reflecting that advances have outpaced declines over the period, even though daily participation fluctuated.
The Advance Decline Line is commonly reviewed alongside index movements to assess whether price trends are supported by broad market participation or driven by a narrower group of stocks.
Different forms of ADR are referenced based on time horizon and analytical context:
Daily ADR - reflects the ratio of advancing to declining stocks for a single trading session.
10-Day ADR or Moving Average ADR - averages daily ADR readings over multiple sessions to reduce short-term volatility and highlight broader participation patterns.
Cumulative ADR / Advance-Decline Line - tracks net advances over time, offering a view of how market breadth evolves across longer periods.
These variations provide flexibility in observing market participation across short-term and extended time frames.
The Advance-Decline Ratio is widely referenced as a measure of market breadth, offering perspective on how evenly price movements are distributed across listed stocks.
It provides context on participation levels beyond headline index performance. For example, when indices move higher while ADR trends lower, price movements may be concentrated in a smaller group of stocks rather than distributed across the broader market.
ADR is also used to identify differences between price direction and underlying participation, adding depth to broader market assessments when reviewed alongside other indicators.
ADR is commonly observed for its relationship with market participation and price behaviour:
Tracking divergences between index levels and stock participation over time
Observing changes in breadth during rising or declining markets
Reviewing whether advances are distributed across multiple stocks or limited to select segments
ADR is also referenced alongside other indicators such as moving averages, trendlines, or oscillators within broader market analysis frameworks
These applications focus on understanding participation trends rather than forecasting price outcomes.
The Advance Decline Ratio is commonly referenced as a supporting market-breadth indicator due to the following characteristics:
Relatively straightforward to calculate using daily advancing and declining stock data.
Provides visibility into how widely market movements are distributed across listed stocks.
Less influenced by large-cap stocks when compared with purely cap-weighted indices, offering a broader view of participation.
Helps highlight shifts in market breadth that may not be immediately visible in headline index levels.
May reflect changes in underlying participation patterns when observed across multiple sessions.
While the Advance Decline Ratio offers insight into market breadth, it also comes with structural constraints that can affect how readings are interpreted across different market conditions.
ADR assigns the same importance to every stock, regardless of market capitalisation or trading volume. As a result, movements in small or thinly traded stocks can influence the ratio as much as large-cap stocks, which may not accurately reflect overall market direction.
During periods of low participation or heightened volatility, ADR readings can fluctuate sharply. These short-term variations may reflect temporary trading activity rather than meaningful shifts in broader market sentiment.
If advances or declines are concentrated within a small number of sectors, ADR may suggest broad strength or weakness even when participation across the wider market is limited. This can distort the breadth signal in sector-driven sessions.
ADR measures only the count of advancing and declining stocks, without considering volume. A stock moving on minimal trading activity carries the same weight as one backed by heavy participation, which can reduce context around conviction levels.
ADR can diverge from index movements for extended periods. Such divergences do not always translate into immediate price adjustments, making timing interpretations less precise.
ADR reflects participation breadth but does not account for valuation, earnings, macroeconomic developments, or technical price structures. Its signals are typically viewed alongside other indicators and broader market data.
Read More: What is Nifty 200 Index
The Advance Decline Ratio is commonly referenced as a measure of market breadth, reflecting how widely stock price movements are distributed across a trading session. By indicating the balance between advancing and declining stocks, it adds context to index-level performance. Although the indicator has limitations, particularly during volatile or low-liquidity periods, ADR contributes to broader market analysis by highlighting participation patterns alongside price-based data.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Reviewer
The Advance Decline Ratio (ADR) reflects whether stock price movements are supported by a larger number of advancing stocks or dominated by declining stocks, offering insight into overall market participation.
It is calculated by dividing the number of stocks that closed higher than the previous session by the number of stocks that closed lower during the same period.
A declining ADR indicates that fewer stocks are advancing relative to declining ones, suggesting reduced participation across the broader market.
On NSE, ADR is derived from advancing and declining stocks within the exchange or selected segments, similar to other global markets. The ratio may be tracked across daily or multi-day periods to observe changes in market breadth.
The 10-day ADR represents an average of daily ADR readings over ten trading sessions, helping smooth short-term fluctuations in breadth data.
An Advance Decline Ratio chart visually tracks changes in ADR over time, showing how market breadth shifts as the number of advancing and declining stocks varies across trading sessions.
A high ADR does not relate to an individual stock. It refers to a market-wide condition where advancing stocks significantly outnumber declining stocks, reflecting broader participation in advancing stocks across the market.
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