In this article, we will be discussing the Nifty Midcap 150 Index, what is it, and how does it works? Should You Invest? Get all your answers about this Index in the article, so, let’s get started.
Nifty Midcap 150 Index:
- NIFTY Midcap 150 represents the next 150 companies (companies ranked 101-250) based on full market capitalization from NIFTY 500. This index intends to measure the performance of mid-market capitalization companies.
- NIFTY Midcap 150 Index is computed using the free float market capitalization method, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to a particular base market capitalization value.
- Nifty Midcap 150 can be used for a variety of purposes such as benchmarking fund portfolios, launching index funds, ETFs, and structured products.
- Index values are calculated on a Real-Time basis.
- Index rebalancing is done Semi-annually – March and September
- To be considered for inclusion in the NIFTY Midcap 150 index, companies must form part of the NIFTY 500.
- The Investible Weight factor of stock should be at least 0.10 (10% free float), OR
- 6-month average free float market cap of the stock should be at least 25% of the 6-month average full market cap of the existing smallest index constituent (before index review)
- Maximum replacements per review are 15
Inclusion & Exclusion:
- Securities will be included if
- rank based on full market capitalization is among the top 225
- full market capitalization is 1.50 times of the last constituent in NIFTY Midcap 150
- Securities will be excluded if
- rank based on full market capitalization falls below 275 or
- if constituents get excluded from NIFTY 500
Reconstitution & Rebalancing:
- Index rebalancing will be done on a semi-annual basis in March and September.
- In case of reconstitution, four weeks prior notice is given to market participants
- The review of broad market indices is undertaken semi-annually based on data for six months ending January and July
- Additional index reconstitution may be undertaken
- in case any of the index constituents undergo a merger, spin-off, delisting, or specific cases of capital restructuring which may result in a change in the stock prices
- in case any of the index constituents are moved to BZ/ SZ series (BZ/SZ stocks are the stocks that fail to comply with the Listing Obligations & Disclosure Requirements(LODR))
- if trading permission of any of the index constituents is withdrawn from the F&O segment
- if security is suspended for trading from Capital Market or SME Emerge at NSE for any reason
- in case of any adverse regulatory findings or order/ governance-related issues, an order issued against any of the index constituents that necessitates removal of such stock from the index
- Every quarter, indices will be screened for compliance with the portfolio concentration norms for ETFs/ Index Funds announced by SEBI on January 10, 2019
Recent Changes- March 2022:
- This Index is having highest allocation to the Financial Sector i.e., 15.8% which is followed by the Chemicals Sector which is having an allocation of 12.4% of the index. The fund is having least allocation of 1.8% in the Textiles sector.
- Calendar year returns are above category average for 5 out of 11 times. For the rest of the period, the returns of the index are at par average mostly.
- Trailing returns have outperformed the benchmark index Nifty 50 every time in the given period i.e., 3-year, 5 years, and 10 years except for the 1 year.
- In terms of Rolling Return too, in every factor, the Nifty Midcap 150 Index has outperformed the category average in every case.
- The standard deviation of this index is around 28 whereas the standard deviation of the Nifty 500 is around 23.
- The beta of this index is around 1.
- The index has also generated Alpha quite very well since inception except for January 2021; PE is more than Nifty 50.
How to invest in this index?
There is 8 option available to invest in this index:
What should investors do?
Overall, this Index Fund/ETFs has performed very well as compared Nifty 500 index and has not turned negative only twice. It is Index/ETF focused on Nifty Midcap 150 stocks that too with a quite aggressive investing approach and hence investors with a high-risk appetite can keep this index on their radar, one can choose it according to their risk-taking appetite and return expectation.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.