Nifty Midcap Select

What is the Nifty Midcap Select?

The Nifty Midcap Select index is a benchmark that tracks the performance of 25 liquid, tradable mid-cap companies listed on the NSE. Mid-cap companies are those that rank from 101 to 250 by full market capitalisation, and they typically offer a balance between growth potential and relative stability. This index aims to provide exposure to fundamentally strong and liquid mid-sized companies across diverse sectors. The selected constituents are often established players in their respective industries with the potential to move up into large-cap territory as their businesses grow.

The Nifty Midcap Select index is ideal for investors looking for growth opportunities beyond large-cap stocks but with relatively lower risk compared to broader midcap exposure. It serves as a benchmark for midcap-focused mutual funds and ETFs. Given its focus on quality and liquidity, the index reflects the performance of the most investable and promising mid-sized businesses in India.

Nifty Midcap Select selection criteria

The stocks are selected from the Nifty Midcap 150 universe. The index includes 25 stocks based on multiple filters – free-float market capitalisation, average daily turnover, and availability for F&O trading. To qualify, stocks must meet minimum listing history and liquidity requirements. The idea is to capture the top-performing and most liquid midcap stocks while avoiding illiquid or volatile names.

Sector representation is not capped, which results in varying weightings depending on stock selection. The index is reviewed semi-annually in March and September. Stocks that no longer meet eligibility norms are replaced with better-performing candidates. The emphasis is on generating consistent returns while minimising liquidity and volatility risks. By combining size, liquidity, and tradability filters, the Nifty Midcap Select becomes a powerful tool for investors aiming for calculated midcap exposure.

How is the Nifty Midcap Select index calculated?

The index uses the free-float market capitalisation-weighted method. Here, only publicly available shares are considered for computing a company’s weight in the index. The base date is April 1, 2005, with a base value of 1000. During market hours, the index is updated in real time using the latest stock prices. At the time of rebalancing, the weight of individual stocks is capped at 15% to ensure diversification and prevent concentration.

NSE Indices Ltd oversees the index management and reconstitution. The index is rebalanced semi-annually to reflect market dynamics and ensure only top-quality stocks remain. This method ensures the index remains practical for investors and reflective of investable mid-cap opportunities. It also makes the index a reliable benchmark for active and passive fund managers focusing on midcap strategies.