The Nifty Midcap 100 index rose 0.5% today crossing the psychological level of 20,000 for the first time in more than two years. The Nifty Midcap Index rose to 20,020 at the high of the day compared to a flat Mumbai market. The Nifty Midcap 100 Index rebounded strongly from March lows. It has increased by approximately 70% since April 1 of this year.
Many analysts remain positive in the markets in general despite the strong increase. “We believe the recent traction in the broader market will continue, but only fundamentally strong mid- and small-cap accountants should be preferred for trading or investing,” Ajit Mishra, Vice President of Research at Religare Broking Ltd.
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The Nifty Midcap 100 Index is designed to capture the movement of the mid-cap segment of the market. The Nifty Midcap 100 index comprises 100 tradable stocks that are listed on the National Stock Exchange (NSE). It is calculated using the free-floating market capitalization method, in which the index level reflects the total free-floating market value of all stocks in the index relative to the particular base market capitalization value.
NIFTY Midcap 100 can be used for a variety of purposes, such as reference fund portfolios, index fund launches, ETFs, and structured products.
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Dolat Capital believes that the mid-cap and small-cap indices are better positioned versus large-cap indices during the second half of this fiscal year. “The earnings commentary has gotten stronger, especially with economic businesses. That was especially evident in the auto, chemical, cement, pharmaceutical and infrastructure industries. Hence our expectation that the mid- and small-cap indices will be better positioned versus large caps during H2FY2021 Short-term valuations have soared in the recent rally, but still below long-term averages. We also expect significant operating leverage to influence better utilization as well as in a lower cost of interests, “said the brokerage.
“The Nifty is now above the 13,000 mark. It is now more or less reaching the upper end of our comfort zone with valuations at 20xFY22E. Therefore, we become cautious with the index as of now, although liquidity and momentum remains favorable. But eventually, this will also normalize as the MSCI rebalancing and year-end FPI flows normalize. “
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