Decoding Nifty Mid-Cap : Analysing the Current Sell Off in Mid-Cap Stocks


Nifty Mid Cap as the name suggests is a stock for the medium market capitalization stocks. This is also among the other variants of NIFTY. It contains top companies which can be traded in the market. The stocks are selected using a method known as FREE FLOAT technique. The Mid cap has 4 types under its name such as Nifty MidCap 50, Nifty MidCap 100, Nifty Mid cap 150, Nifty Mid Cap Select.

The Mid Cap to be discussed here is NiftyMid-Cap 100. This is a very notable index as it is used in the open market for Options and Futures. The Index consists of shares with a volume in trading and which are not a part of Nifty50. These stocks are selected through prioritizing the Futures and options trading facility associated with them. Nifty MidCap 100 consists of all the companies that are present in Nifty MidCap 50. The rest of companies are selected based on their turnover in Nifty Midcap 150 Index.

Composition of Mid Cap 100

This index was brought in around 2005. The base year for the same is taken as 2003. The initial valuation for Nifty Mid cap 100 was 1000 points and currently the same is 31082 points. The calculation frequency for the same is Real time and the rebalancing for the index is done Semi Annually.

As per the latest metrics the composition of Nifty 100 MidCap is as under :-

  • Financial Services – 18.45%
  • Consumer Goods – 9.62%
  • Automobile – 7.91%
  • Industrial Manufacturing – 7.74%
  • Pharma – 7.48%
  • Oil and Gas – 7.29%
  • I.T. – 7.22%
  • Chemicals – 7.08%
  • Consumer Services – 4.18%
  • Construction – 3.98%
  • Power – 3.78%
  • Services – 2.89%
  • Media and Entertainment – 2.42%
  • Health care Services – 2.40%
  • Cement and its associated products – 2.20%
  • Telecom – 1.90%
  • Metals – 1.41%
  • Textiles – 1.35%
  • Fertilizers – 0.70%

Thus the allocation of Nifty 100 Midcap has been done in the above segment in the percentage proportion basis. The reaction of Nifty Mid cap or the movement of Nifty Midcap is based on the movement of such segments and shares included under such segments.

Weightage of Shares 

As of now the highest weightage in Nifty MidCap 100 is given to Adani Total Gas Ltd. The proportion of the same in Nifty 100 Midcap is 2.88%. SRF ltd. comes second with a weightage of 2.41% followed by Crompton Greaves with 2.08% and Voltas at 2.07%. Zee comes next with 2.06% and then comes Godrej properties (1.98%), Mindtree (1.98%), Tata Power (1.98%), Shriram Transport (1.92%) and Mphasis (1.83%).

Thus the top shares with their weightages are mentioned above. The movement in these shares causes their proportionate change in the Nifty Midcap 100 Index. This index is also an indicator of the potential next Nifty50 participants as they get filtered out from this list with the passage of time. As and when the company expands and increases its market capitalization volume, its ranking increases and it gets a head start for getting an entry into the Nifty50 Index of Indian markets. 

Selection Basics for Companies into Nifty Midcap 100

All the companies that get included into this index should be a part of Nifty Midcap 50 index. Also the added ones should not be part of Nifty 100 Midcap index. This means that all companies that are elected into Nifty Midcap 50 get a direct entry into such index. However, for the remaining companies – there is a selection criteria.

The remaining companies should be ranking among the top 70s in the Nifty Midcap 150 and this ranking is based on their daily turnover rate. Also the securities which are already a part of Nifty Midcap 100 will be laid off if their ranking of turnover is below the top 130 companies in the Nifty Midcap 150. For any new security getting listed in the market, the criteria is evaluated based on their last 3 month performance.

Midcap Performance 

Since the last few days the Nifty Midcap 100 has been taking on a major hi9t. The Index has dropped for almost 2000 Points from it’s all time high of 33243 points. This is due to the recent correction in Nifty 50 and the Indian markets.

This has been possible as the major companies in Nifty Midcap got a high selling pressure due to heavy profit booking in the markets. The markets have been a lot unstable lately. The volatility has also increased which has made it difficult to trade wisely in the current situation. However there is such a large erosion in valuation of Nifty Midcap 100 which indicates that FII and Retail investors are now getting an exit form the Indian indices and markets as the markets have given them the highest possible returns.

It is also possible that this can be a way of dragging markets down and creating a position again for the further time to come. But in the end such a high value erosion news to be backed by some reason. It is always said that when there is profit booking in markets, people lay off the stocks that are not in Nifty 50 range and since the MidCap 100 stocks are taking a hit. It is believed that Nifty 50 stocks are very safe in comparison to such Midcap 100 stocks. Hence the sell off is triggered and the index has been dragged down to such levels.

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