The Nifty Midcap index has been on an impressive run, recently crossing the psychological milestone of 40,000 points. Nifty Midcap 100 hit a fresh record high today at 40,540.95. Over the last six months, it witnessed a remarkable surge of approximately 35%, demonstrating its resilience in a market marked by volatility, while the smallcap index soars above the 12,000 mark to capture around 40% gain since March 2023.
Arvinder Singh Nanda, Senior Vice President at Master Capital Services, attributed this impressive performance to several factors. One significant driver was the growing risk appetite among investors, driven by improving economic health and domestic developments. Midcap stocks were often seen as closely tied to economic growth, offering the potential for lucrative returns. As such, they had become a favored choice for investors seeking to capitalize on India’s economic resurgence.
Smallcap Stocks Outlook
In tandem with the midcap rally, the Nifty Smallcap index had been on an equally impressive trajectory. It had soared past the 12,000 mark, registering gains of approximately 40% since March 2023. This extraordinary ascent had positioned smallcap stocks as a hotbed of opportunity for investors.
Vinod Nair, Head of Research at Geojit Financial Services found the valuation of both midcap and smallcap stocks appealing compared to trends observed over the past seven years. Smallcaps, in particular, were considered even more attractive in the then-current market scenario. However, amidst overall market consolidation, opinions on investing in high-risk categories like smallcaps varied. “Our view is that India is now more of a stock to sector play. We anticipate that the category as a whole will outperform in the medium to long term. Although there has been strong performance in the short term by mid & smallcaps, sustaining this in the near term may pose a challenge,” he added.
Some market experts argued that India’s market dynamics had shifted towards being more stock to sector-oriented. They anticipated that, in the medium to long term, the small and midcap categories as a whole would continue to outperform. While these segments had exhibited robust short-term performance, sustaining this momentum had presented challenges.