Nifty Midcap 50

What is the Nifty Midcap 50?

The Nifty Midcap 50 is a size-based equity index developed and maintained by the National Stock Exchange (NSE) of India to represent the performance of the top 50 most liquid midcap stocks listed on the exchange. The index provides investors like you with a benchmark for tracking mid-sized companies that are neither too large nor too small in terms of market capitalisation. These midcap companies are often characterised by their high growth potential, expanding market presence, and the ability to quickly adapt to changing market conditions compared to their large-cap counterparts.

The Nifty Midcap 50 is designed to serve as a barometer for the midcap segment of the Indian equity market and is widely used by fund managers, institutional investors, and retail investors aiming to diversify their portfolios beyond blue-chip stocks. The index covers a wide spectrum of sectors, including finance, manufacturing, pharmaceuticals, consumer goods, information technology, and more, providing a well-rounded view of India’s growing corporate landscape.

By investing in or benchmarking to the Nifty Midcap 50, market participants can gain exposure to emerging leaders and innovative companies that have the potential to become tomorrow’s large-cap giants. The index is reviewed and rebalanced semi-annually to ensure it continues to reflect the evolving dynamics of the midcap segment, making it a valuable tool for those interested in India’s growth stories.

Nifty Midcap 50 stocks selection criteria

The selection of stocks for the Nifty Midcap 50 index is governed by a meticulous and transparent methodology to ensure that only the most liquid and representative midcap stocks are included. To qualify, a stock must first be listed and traded on the NSE and must be part of the Nifty Midcap 150 index, which contains the top 150 midcap companies by full market capitalisation. From this universe, the 50 most liquid stocks are selected based on the average impact cost over the past six months, which measures the cost of executing a trade in a specific stock. Stocks with the lowest impact costs, indicating high liquidity and easy tradability, are prioritised for inclusion.

In addition to liquidity, the stocks must meet certain minimum criteria for trading frequency, average daily turnover, and free-float market capitalisation, ensuring that only actively traded and widely held companies are represented. The index also avoids over-concentration in any single stock or sector by capping the maximum weight assigned to each constituent during rebalancing. The selection process is conducted semi-annually, allowing the index to adapt to changing market conditions and the emergence of new midcap leaders. This disciplined approach ensures that the Nifty Midcap 50 remains a robust and effective benchmark for tracking the performance of India’s most prominent midcap stocks.

How is the Nifty Midcap 50 index calculated?

The Nifty Midcap 50 index is calculated using the free-float market capitalisation weighted methodology, ensuring that each constituent’s weight reflects the market value of its publicly available shares. The calculation begins by determining the free-float market capitalisation of each constituent, which is done by multiplying the stock’s price by its free-float shares—those available for trading, excluding promoter and government holdings.

The sum of the free-float market capitalisations of all 50 constituents forms the numerator. This is then divided by a base market capitalisation, which is a fixed value set at the inception of the index, adjusted for any corporate actions such as stock splits, rights issues, or changes in the list of constituents. The index value is calculated as:

Index Value = (Sum of Free-Float Market Capitalisation of All Constituents) / Base Market Capitalisation × Base Index Value (usually 1,000)

Corporate actions are carefully accounted for to ensure that such events do not artificially distort the index value. The index is calculated in real time using the latest traded prices of constituent stocks. It is reviewed and rebalanced semi-annually to ensure it continues to accurately reflect the midcap segment’s performance. This robust calculation methodology makes the Nifty Midcap 50 a reliable and transparent benchmark for midcap investing.