NSE to introduce 4 new indices in capital, F&O segments from April 8

Nifty is just 1.5% away from its all-time high, with the midcap index outperforming the benchmarks over a period of time. Experts believe midcap stocks in infrastructure, FMCG and power sectors will do well, with the Nifty Midcap 100 index expected to witness a 25% rally in the coming 3-4 quarters.

Shares of Kolkata-based smallcap Jai Balaji Industries, which manufactures iron and steel products like TMT bars, are up 475% to top the multibagger list. Similarly, shares of another smallcap GVK Power & Infrastructure are up 300% so far in Q2 following a 50% rally in just two weeks.

In March 2023, when Nifty started to recover, the mid and smallcap indices were still under selling pressure. But in April, when the headline index gained 4%, the midcap index advanced over 5% while smallcaps gained 7%.

For all the investors who have been focussing on the midcap segment, this was a week of reality check. The way midcap stock tumbled and the way market breadth panned out it was just a reminder of two things, never ignore valuations and secondly however good the stock might be when the correction takes place, even the best of the stocks can decline sharply. For all those investors whose portfolio is titled in favor of the mid-caps need to do two things in current market conditions. First, don't extrapolate what has happened in the last one quarter to the mid caps stocks. The reason: there might be some change in the ways the flows are coming to midcap funds due to recent SEBI advisory through AMFI to fund houses. Second, which is more important, be careful when taking fresh exposure to this segment of the market and apply checks and balances.

There is no stopping the rally in mid and small-cap stocks. The broader markets have been consistently hitting new peaks this year including today, massively outperforming the benchmark indices. Should you still buy or stay cautious?

The Nifty FMCG index hit a new record high of 49,825 in intraday trade, and the BSE FMCG index also hit a record high. In the same sector, historical data suggests that FMCG stocks outperform the broader market during correction phases and Piyush Chaudhry recommended three FMCG stocks for trading

Since 2010, the Nifty Smallcap 100 and the Nifty Midcap 100 have embodied a bullish run in the month of April. This trend has been characterized by consistent upward movements in these indices, marking April as a particularly favourable period for investors eyeing small and midcap stocks.

If we look at the last five years, only once has this happened in 2022, where midcap stocks (1.38% returns) outshined the smallcap peers (-1.38%). Taking a slightly wider view, the midcap index has outperformed the smaller index (in terms of market cap) in six out of the last 10 years (including 2024).

Buy or sell indicator: Nifty is still in 16,800 to 17,200 range and bullish or bearish trend can assumed on breakage of either side of the range, believes Anuj Gupta of IIFL Securities

Rohit Srivastava cautions about profit booking in March affecting Nifty and smallcap index. Losses in F&O space and highest futures open interest cause selling pressure on all segments. Longer-term supports for smallcap index are at 14,930 and 13,700.