Nifty Midcap 100

What is NIFTY Midcap 100?

The NIFTY Midcap 100 is an index on the National Stock Exchange (NSE) that captures the movement in the midcap segment of the equities market. It is a diversified index of 100 stocks which includes 50 stocks from NIFTY Midcap 50, while the remaining 50 stocks are selected from the NIFTY Midcap 150 index on the basis of average daily turnover. These stocks span 18 sectors of the economy, such as Financial Services, Capital goods, Oil, Gas & Consumable Fuels, and Healthcare, to name a few.

The NIFTY Midcap 100 index captures almost 11% of float-adjusted market capitalization on NSE as of June 2022. The total traded value of all index constituents is approximately 20% of the traded value of all stocks on NSE for the last six months.

This Midcap 100 index was launched on July 18, 2005, with the base year set to 2003 and the base value at 1000. Since then, the NIFTY Midcap 100 share price has breached the levels of 27,000. It is reconstituted semi-annually in order to ensure that it continues to reflect the changing dynamics of the Indian financial markets and the economy.

The Midcap index is governed by a three-tier structure that comprises the BOD of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee. NIFTY Midcap 100 index has a variant in the form of the NIFTY Midcap 100 Total Returns Index. This index is ideal for benchmarking of fund portfolios, index funds and ETFs like the MO Midcap 100 ETF.

Nifty Midcap 100 Stocks Selection Criteria

The NIFTY Midcap 100 share price is computed by weighing its 100 stocks on the basis of free-float market capitalization. Free float refers to the shares that are not held by promoters and are readily available to the public for trading.

The constituent stocks need to meet the following eligibility criteria:

1. Will be listed on the National Stock Exchange.
2. Will include all companies from NIFTY Midcap 50.
3. Will include securities from NIFTY Midcap 150 if they feature among the top 70 constituents on the basis of average daily turnover.
4. Will exclude securities if they feature below 130 among NIFTY Midcap 150’s constituents on the basis of average daily turnover or if the constituent is excluded from NIFTY Midcap 150.
5. Will judge newly listed securities on the basis of three-month period data instead of a six-month period data.

Equities with differential voting rights (DVRs) are also eligible for inclusion in the index. But instruments providing fixed returns, such as convertible stock, preferred stock, warrants, and rights, shall be excluded.

How is NIFTY Midcap 100 Calculated?

The index value is calculated as follows –

Index value = Current free-float market capitalization/ (Base free-float market capitalization * Base Index Value)

The NIFTY Midcap 100 index is reviewed semi-annually based on six months of data ending January and July. The replacement of stocks in NIFTY Midcap 100 (if any) is implemented from the last trading day of March and September.

Factors Affecting Nifty Midcap 100

• Market Capitalisation of stocks: Influences the overall valuation and weightage of individual stocks in the index. 
• Foreign Investors' Ownership: The percentage of stocks foreign investors own impacts market outlook and liquidity.
• Number of Listed Companies: This affects the breadth and diversity of the index. 
• Fuel Price Volatility: Energy costs can impact operating expenses and profitability, affecting mid-sized companies. 
• Industrial Production Data: Reflects economic activity and performance, influencing the sectoral composition of the index. 
• Government Stability and Performance: Political stability and effective governance contribute to investor confidence. 
• Gross Domestic Product (GDP) Data: Overall economic health impacts the financial performance of midcap companies. 
• Interest Rates: This can impact borrowing costs and profitability, affecting stock prices in the midcap segment.

Any changes in these variables can lead to dynamic fluctuations in the Nifty Midcap 100 index.

How To Invest in Nifty Midcap 100?

You can invest in Nifty Midcap 100 in two ways:

1. Individual Stock Investment: Invest directly in individual stocks listed on the Nifty Midcap 100. This method requires in-depth research on each stock's performance, financials, and market trends.
2. Exchange Traded Funds: Opt for a more diversified approach by investing in ETFs that track the Nifty Midcap 100. This method exposes a basket of midcap stocks, reducing risk compared to individual stock picking. Investors should assess their risk appetite, investment horizon, and financial goals before deciding on the most suitable method for investing in the Nifty Midcap 100.