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Nifty Midcap 100 index today rose 0.5% cross the psychological level of 20,000 for the first time in over two years. The Nifty Midcap index rose to 20,020 at day's high as compared to a flat Mumbai market. Nifty Midcap 100 index has rebounded strongly from March lows. It is up about 70% from April 1 this year.

Many analysts remain positive on the broader markets despite the sharp run-up. "We feel the recent traction in the broader market will continue but only fundamentally sound midcap and smallcap counters should be preferred for trading or investment," Ajit Mishra, VP - Research, Religare Broking Ltd.

Also read: India can’t make up its mind on PSUs, 30 years after liberalisation

The Nifty Midcap 100 Index is designed to capture the movement of the midcap segment of the market. The Nifty Midcap 100 Index comprises 100 tradable stocks listed on the National Stock Exchange (NSE). It is computed using 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 particular base market capitalization value.

NIFTY Midcap 100 can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and structured products.

Dolat Capital sees mid/small-cap indices better placed vs the large caps over the second half of this fiscal. "The earnings commentary has turned stronger especially with economy businesses. That was apparent especially in the auto ancillaries, chemicals, cement, pharma and infra. Hence our expectation that the mid / small cap indices will be better placed vs the large caps over H2FY2021. Near term valuations have spiked on the recent rally but still below the long period averages. We also expect significant operating leverage to play out on the better utilization as well as lower interest cost," the brokerage said.

"The Nifty is now above the 13,000 mark. It is now reaching more or the less the upper end of our comfort zone with valuations at 20xFY22E. We are therefore turning cautious on the index from now on even though liquidity and momentum remains supportive. But eventually this will normalize too as the MSCI rebalancing and year-end FPI flows normalise."

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