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The past few years have seen a significant increase in the number of retail investors who invest in equity in the country. As investors become more and more financially savvy, they begin to look for higher-return instruments, according to their risk appetite. They seek exposure to different sectors and companies that have the potential of giving disproportionately high returns. If you are one of these, you would want to learn about midcap stocks that offer high returns at higher risks. Various indices track these stocks to give an idea about their performance year on year. These indices are structured with different stock inclusion criteria, weightage, and rebalancing schedules.<\/p>\n\n\n\n
This article focuses on an index called NIFTY Midcap 150, exploring its structure, advantages, and the process of investing in it.<\/p>\n\n\n\n
NIFTY Midcap 150 is an index consisting of 150 companies ranked between 101 and 250 based on full market capitalisation from NIFTY 500. <\/p>\n\n\n\n
Full market capitalisation stands for the product of the stock price of the company and the total number of outstanding shares. The total outstanding shares include both the active shares available in the market and the inactive shares held by promoters and the government. <\/p>\n\n\n\n
The index was launched in April 2016 with a base value of 1000 on the base date of 01 April 2005. It is rebalanced semi-annually with the average data of 6 months before the cut-off date used to determine the stocks that would make it to the list. The cut-off dates are 31 January and 31 July. <\/p>\n\n\n\n
While the inclusion of stocks in the NIFTY Midcap 150 index is decided based on the full market capitalisation of the company, the weight of the stock is decided based on the free-float market capitalisation.<\/p>\n\n\n\n
Free-float market capitalisation refers to the product of the price of the company stock and the number of shares readily available in the market. <\/p>\n\n\n\n
For example, let us say a company has a total of 1 lakh shares, of which 80,000 are available in the market and 20,000 are held by promoters. The stock price of the company is Rs. 50. Now, the full market capitalisation would be 1 lakh x50 = 50 lakh. The free-float market capitalisation will be 80 thousand x 50 = 40 lakhs. <\/p>\n\n\n\n
Therefore, companies with a higher free-float market capitalisation are ranked higher in the index. The table below lists the top 10 companies by free-float market capitalisation in NIFTY Midcap 150.<\/p>\n\n\n\n
<\/p>\n\n\n\n As you can see, the weights of various sectors in the index are not the same. Some sectors have a high representation in the index and some do not. Here is a list of weights of various sectors in NIFTY Midcap 150 as on January 2023.<\/p>\n\n\n\n <\/p>\n\n\n\n The index has delivered constantly higher returns than NIFTY 100 during periods of good market performance. On the other hand, it has underperformed the NIFTY 100 in times of negative market performance. <\/p>\n\n\n\n That is, the average rolling returns for NIFTY Midcap 150 have been higher than NIFTY 100; however, with a higher standard deviation (standard deviation is an indicator of volatility in the stock price). This means that the return-risk ratio of the index is relatively lower than that of NIFTY 100. <\/p>\n\n\n\n Here is a comparison of returns given by NIFTY Midcap 150 versus other indices (as on August 2021 as per the latest NSE report).<\/p>\n\n\n\n <\/p>\n\n\n\n One can gain exposure to NIFTY Midcap 150 by investing in an index fund or ETF that tracks the index. Here are some of the index funds that you can choose from.<\/p>\n\n\n\n <\/p>\n\n\n\n Apart from investing directly in the Nifty Midcap 150 stocks or gaining exposure to a fund\/ETF tracking the index, one can also invest in options \u2013 which are derivatives of the underlying index. <\/p>\n\n\n\n NIFTY Midcap 150 funds offer a unique opportunity to invest in companies that fall between large-cap stability and small-cap growth potential.<\/p>\n\n\n\n While the midcap segment can be volatile with short-term fluctuations and market challenges, it still offers higher growth potential compared to large-cap funds, as mid-cap companies are often in their expansion phase.<\/p>\n\n\n\n Additionally, these funds enable investors to tap into the benefits of long-term wealth creation by investing in emerging businesses that could become tomorrow\u2019s market leaders. With professional fund management, these funds suit investors seeking a balanced risk-return profile.<\/p>\n\n\n\n Options are contracts that allow an investor to buy or sell an underlying stock or index before a specific date. The contract provides the investor an \u2018option\u2019 which is not an \u2018obligation\u2019. These options allow you to benefit from predicting the correct movement of the underlying index. <\/p>\n\n\n\n For example, if you think that the NIFTY Midcap 150 is bound to decline in the next month, you could invest in a ‘Put’ option with expiry at the end of next month. This option allows you to sell the underlying index at a predetermined higher price than the prevailing market price of the index.<\/p>\n\n\n\n In conclusion, the NIFTY Midcap 150 index offers investors a valuable opportunity to access a diversified basket of 150 companies with growth potential. Investing in these, although is relatively risky, has the potential for high returns. These companies have the opportunity to become leaders in their sectors, potentially leading to long-term wealth accumulation. By understanding its structure, advantages and the investment process, individuals can make informed decisions to potentially benefit from the growth of mid-cap companies in various sectors. Opting for NIFTY Midcap 150 index investment through Index Funds and ETFs can offer convenience, ease and cost-effectiveness.<\/p>\n\n\n\nCompany<\/strong><\/td> Market Capitalisation<\/strong><\/td><\/tr> Max Healthcare Institute Limited<\/td> 2.24%<\/td><\/tr> Aditya Birla Capital Limited<\/td> 1.74%<\/td><\/tr> Indian Hotels Company Limited<\/td> 1.73%<\/td><\/tr> Trent Limited<\/td> 1.72%<\/td><\/tr> AU Small Finance Bank Limited<\/td> 1.69%<\/td><\/tr> Shriram Finance Limited<\/td> 1.66%<\/td><\/tr> TVS Motor Company Limited<\/td> 1.63%<\/td><\/tr> Tube Investment of India Limited<\/td> 1.49%<\/td><\/tr> Tata Elxsi Limited<\/td> 1.45%<\/td><\/tr> Adani Power Limited<\/td> 1.36%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Sector<\/strong><\/td> Weight<\/strong><\/td><\/tr> Financial Services<\/td> 20.39%<\/td><\/tr> Capital Goods<\/td> 13.12%<\/td><\/tr> Healthcare<\/td> 10.42%<\/td><\/tr> Automobile & Auto Components<\/td> 8.53%<\/td><\/tr> Chemicals<\/td> 6.61%<\/td><\/tr> Consumer Services<\/td> 5.63%<\/td><\/tr> Consumer Durables<\/td> 5.47%<\/td><\/tr> Information Technology<\/td> 5.19%<\/td><\/tr> Oil, Gas and Consumable Fuels<\/td> 4.04%<\/td><\/tr> Fast-Moving Consumer Goods<\/td> 3.81%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n NIFTY Midcap 150 Index Performance<\/strong><\/h2>\n\n\n\n
Period<\/strong><\/td> NIFTY 100<\/strong><\/td> NIFTY Midcap 150<\/strong><\/td> NIFTY SmallCap 250<\/strong><\/td> NIFTY 500<\/strong><\/td><\/tr> 1 year<\/td> 52.8%<\/td> 70.0%<\/td> 84.7%<\/td> 56.9%<\/td><\/tr> 3 years<\/td> 14.4%<\/td> 16.1%<\/td> 14.0%<\/td> 14.6%<\/td><\/tr> 5 years<\/td> 15.5%<\/td> 17.2%<\/td> 13.6%<\/td> 15.5%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n How to Invest in NIFTY Midcap 150?<\/strong><\/h2>\n\n\n\n
Index Mutual Fund<\/strong><\/td> AUM<\/strong><\/td><\/tr> HDFC Nifty Midcap 150 Fund<\/td> Rs. 12 crores<\/td><\/tr> Motilal Oswal Nifty Midcap 150 Fund<\/td> Rs. 702 crores<\/td><\/tr> Nippon India Nifty Midcap 150 Fund<\/td> Rs. 707 crores<\/td><\/tr> ICICI Prudential Nifty Midcap 150 Fund<\/td> Rs. 119 crores<\/td><\/tr> SBI Nifty Midcap 150 Fund<\/td> Rs. 134 crores<\/td><\/tr> Aditya Birla Sunlife Nifty Midcap 150 Fund<\/td> Rs. 86 crores<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Benefits of NIFTY Midcap 150 funds<\/strong><\/h2>\n\n\n\n
NIFTY Options Explained<\/strong><\/h2>\n\n\n\n
To Summarise<\/strong><\/h3>\n\n\n\n