How to access Nifty Midcap 100?
The Nifty Midcap 100 index can be accessed by investing in exchange-traded funds (ETFs) or index funds that track its performance. These funds are available through asset management companies and can be purchased via any registered stockbroker or mutual fund platform. Retail investors can use demat accounts linked to their trading accounts for ETF purchases.
Alternatively, you can invest in the underlying stocks that make up the index by directly purchasing them in appropriate proportions. However, this requires more capital and effort. Most investors prefer passive instruments like index funds that replicate the Nifty Midcap 100 performance. These investments reflect the collective performance of mid-sized companies, offering diversification benefits and growth potential.
Real-world example
Suppose an investor in 2020 had invested Rs. 1 lakh in a Nifty Midcap 100 index fund when midcap valuations were low due to market correction. As the economy recovered post-pandemic, many midcap companies gained significantly, leading to strong index-level returns. By 2023, this investment grew substantially, reflecting the robust rebound of mid-sized companies across sectors.
This scenario demonstrates how midcap indices like Nifty Midcap 100 offer higher growth potential during economic recoveries. The investor, without picking individual stocks, benefitted from a diversified portfolio of midcap firms in sectors such as healthcare, capital goods, and finance. The index helped mitigate stock-specific risk while delivering competitive returns over the medium term.
Tips for investing in Nifty Midcap 100
- Invest through index funds or ETFs: Choose reputable AMCs offering Nifty Midcap 100 funds for low-cost, passive exposure to the index.
- Use SIPs for long-term gains: Systematic investment plans reduce the impact of volatility and help build wealth over time.
- Monitor market cycles: Midcaps tend to outperform in economic recoveries. Invest when valuations are favourable and growth potential is strong.
- Diversify portfolio: Combine midcap exposure with large-cap and small-cap funds to reduce concentration risk.
- Review periodically: Evaluate performance at regular intervals and rebalance based on market conditions and financial goals.
Characteristics of Nifty Midcap 100
- Mid-sized companies: The index includes the top 100 companies ranked from 101 to 200 by full market capitalisation, making them mid-sized firms.
- Sectoral diversity: It spans multiple sectors including finance, healthcare, industrials, and IT, providing broad-based exposure.
- Higher volatility: Compared to large-cap indices, the Nifty Midcap 100 is more volatile, reflecting sharper price movements.
- Greater growth potential: These companies are typically in the expansion phase, offering better long-term growth opportunities.
- Market representation: It acts as a benchmark for the Indian midcap segment and reflects investor sentiment in this category.
