Midcaps: How have they performed? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Midcaps: How have they performed?

Dec 11, 2008

What is the Midcap Index?
The indices in general are constructed on the 80-15-5 method, wherein companies aggregating to approximately 98.5% of average market capitalization are categorized under large, mid and small cap segment respectively from the BSE universe. The BSE Midcap Index tracks the performance of scrips, which contribute almost 15% of aggregate market capitalization of all the companies listed on the BSE. The constituents of the index are reviewed every quarter. At the end of October 2008, 274 companies constituted the BSE Midcap Index.

Performance over the years
If one had invested Rs 100 each in the BSE Sensex, BSE 100, BSE Midcap and the BSE Smallcap indices in April 2005, it would be currently worth Rs143, Rs 135, Rs 93 and Rs 86 respectively. Since its inception (April 2005) until December 2007, the BSE Midcap index has been almost in tandem with its larger counterparts. However, in the year till date the index has been completely out of sync as compared to the BSE Sensex and BSE 100 indices.

  • Also read - Smallcaps: How have they performed?

    In our previous article, we had mentioned about the possible reason behind the smallcaps stocks outperforming the large cap stocks at the peak of the bull runs. Now, with the markets being in the bear phase, the reverse should be true as well. Midcaps, being fast growing companies should bounce back quickly. However, the same has not been true. The reasons for the same being investors' aversion to risk and also the deep discount to intrinsic values of large caps. Also, it should be kept in mind that any slowdown in economic activities is likely to hurt the smaller players first.

    Conclusion
    Share prices are nothing but indicators of an investor's expectations of a company's future earnings. While this rule may not always apply to the companies from the BSE Small cap index, the same cannot be said about the Midcap Index. Midcaps as compared to smallcaps are relatively more researched and lesser dependant on the movement of the largecaps due to the availability of information. As such, the Midcap Index is relatively less impacted by the movement of the larger peers.

  • Equitymaster requests your view! Post a comment on "Midcaps: How have they performed?". Click here!

      

    More Views on News

    India's QE and the Stock Market (Fast Profits Daily)

    Apr 14, 2021

    In this video, I'll tell you how the RBI's new quantitative easing program could affect the stock market.

    Don't Write Off Yet This Sector Yet (Profit Hunter)

    Apr 14, 2021

    Will apps like Netflix deal a death blow to theatres? Find out here...

    Best Banking & PSU Debt Funds to Invest in 2021 (Outside View)

    Apr 13, 2021

    PersonalFN explains the outlook for Banking & PSU Debt funds and the best Banking & PSU Debt funds that can be considered for investment in 2021.

    India: Recovery Stalled by Vaccine Games? (The Honest Truth)

    Apr 13, 2021

    Ajit Dayal on how India's vaccine strategy will impact the markets.

    Why Did the Market Crash on Monday? (Fast Profits Daily)

    Apr 13, 2021

    In this video, I'll you what I think is the real reason behind yesterday's market crash.

    More Views on News

    Most Popular

    Best Midcap Stocks to Buy

    Midcaps can literally have the best of both worlds...quality and potential. However, buying the best midcap stocks does NOT m...

    4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

    Apr 6, 2021

    Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

    If the Market Falls, I Will Do This... (Fast Profits Daily)

    Apr 1, 2021

    What should you do if the market falls? In this video, I'll tell you what I will do.

    The Indian Real Estate Party Has Just Begun (Profit Hunter)

    Apr 1, 2021

    A favourable demand supply scenario makes a strong case for real estate prices.

    India: Recovery Stalled by Vaccine Games? (The Honest Truth)

    Apr 13, 2021

    Ajit Dayal on how India's vaccine strategy will impact the markets.

    More

    India's #1 Trader
    Reveals His Secrets

    Secret To Increasing Your Trading Profits Today
    Get this Special Report,
    The Secret to Increasing Your Trading Profits Today, Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Apr 13, 2021 (Close)

    MARKET STATS