Nifty MidCap 100 scales record high despite tepid show by benchmark index

While the S&P BSE Sensex and the Nifty50 out up a lacklustre performance on Tuesday, the midcap segment emerged as the centre of attention with the Nifty MidCap 100 scaling a record high.

The Nifty MidCap 100 Index hit a new record high of 33,695 points, up 0.4 percent, while Sensex and Nifty gained just 0.1 percent each on Tuesday. The Nifty MidCap 100 index was up for seven straight sessions and increased 3.22 percent during this period.

Since March 28, the Nifty MidCap 100 index has surged nearly 14.6 percent, while the Sensex and the Nifty jumped nearly 10 percent each.

The Nifty SmallCap 100 Index is still 0.6 percent away from its 52-week high hit on December 14, 2022. The index hit an all time high of 11,980.75 on January 17, 2022.

Midcap and smallcap stocks saw continued interest from investors after posting better-than-expected earnings, analysts said.

The recent outperformance of midcap and smallcap stocks can be attributed to several factors such as anticipation of demand growth, attractive valuations, and better-than-expected earnings reported in the March quarter, according to analysts.

This trend has coincided with a moderation in commodity prices, adding to the positive sentiment. Positive macroeconomic developments, such as declining inflation figures and the Reserve Bank of India (RBI) raising its growth forecast from 6.4 percent to 6.5 percent, have also contributed to the market’s momentum.

“The latest rally is supported by a robust prediction of domestic economic growth, a normal monsoon, and a drop in international commodity prices, which will back up a rise in future margins. On the valuation front, the Nifty midcap 100 is currently trading in line with its long-term average, which is decent for long-term investors,” said Vinod Nair, Head of Research at Geojit Financial Services.

In addition, the decision to pause interest rate hikes by the RBI has been well-received by market participants, further boosting market sentiment. Moreover, the shift of foreign institutional investors (FIIs) from net selling to net buying has added to the positive momentum in the market, reinforcing the favorable outlook for midcap and smallcap stocks.

“A strong rebound of retail and foreign investors, after a long consolidation of 1.5 years in the domestic stock market, has provided leeway for the performance of midcaps,” Nair said.

RBI Governor Shaktikanta Das recently stated that India’s GDP growth in the fiscal year 2022-23 may exceed the estimated 7 percent figure. He mentioned that retail inflation is expected to fall below the 4.7 percent mark this month.

Among gainers, Adani Power Ltd jumped 48 percent, Bandhan Bank 41 percent, AU Small Finance Bank 40 percent, Astral Ltd 38 percent and Godrej Properties jumped 35 percent since March 28. IDFC First Bank, Devyani International Ltd and Sona BLW Precision Forgings and CG Power and Industrial Solutions jumped nearly 32 percent each.

Only 10 firms reported negative returns during this period and fell 1-12 percent. These include Gland Pharma, Ipca Laboratories Ltd, Zee Entertainment Enterprises, Hindustan Zinc, Crompton Greaves Consumer Electricals Ltd, Aditya Birla Fashion and Retail Ltd, Indian Bank, Jindal Steel and Power, Oil India Ltd and Federal Bank Ltd.