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NIFTY Midcap 150 Momentum 50 Index

When it comes to the fast-changing canvas of investment opportunities, indices play a crucial role. They help guide investors towards promising sectors and assets.  Among these indices, the NIFTY Midcap 150 Momentum 50 Index is hard to ignore. ...Read More

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NIFTY Midcap 150 Momentum 50 Index

NIFTY Midcap 150 Momentum 50 Index - Meaning, stocks, performance and returns

NIFTY Midcap 150 Momentum 50 Index - Meaning, stocks, performance and returns
April 08, 2024

Table of Content

 

What is the Nifty Midcap 150 Momentum 50 Index?

As a strategy index, the Nifty Midcap 150 Momentum 50 Index consists of 50 stocks carefully picked from the more exhaustive Nifty Midcap 150 Index. It only includes listed stocks. The selection is based on each stock’s normalised momentum score. After adjusting for volatility, the normalised momentum score is computed for each stock using its 6-month and 12-month price returns.

This index does not include stocks that have hit the lower or upper circuit in at least 20% or more trading sessions across the last six months. Neither are the ones that do not offer trades on Futures and Options.

Each stock's weight on the Nifty Midcap 150 Momentum 50 Index is determined by combining its free-float market capitalisation with its normalised momentum score. This index is excellent for creating ETFs, structured products and index funds. It is also useful in benchmarking schemes such as momentum funds. 

The Nifty Midcap 150 Momentum 50 Index undergoes rebalancing twice a year — once in June and then in December. There is a possibility of new stock additions at this time if some existing ones are removed.

Key Features of NIFTY Midcap 150 Momentum 50 Index

Here are some of the key features of the NIFTY Midcap 150 Momentum 50 Index that make it an attractive investment opportunity:

1. Mid-cap Focus

The index primarily focuses on the top 50 mid-cap companies listed on the National Stock Exchange of India (NSE). The market capitalisations of these companies are between large-cap and small-cap companies. Therefore, they offer a balance between growth and stability.

2. Stringent selection criteria

The index strictly includes listed stocks only. It does not include stocks that may be a part of the NIFTY Midcap 150 but have hit the lower or upper circuit in the last six months across at least 20% or more trading sessions. Also, stocks that do not offer trades on futures and options are excluded.

3. Momentum based composition

Predicted momentum criteria, including indications like trading volume and recent price performance, determine which 50 stocks make the cut for the NIFTY Midcap 150 Momentum 50 Index. Momentum investing helps select stocks displaying substantial upward price trends for a given period. 

4. Rebalancing

The index is rebalanced periodically to maintain its stable composition. This practice helps accommodate shifts in the momentum of the companies that form it. It takes place twice a year and involves the addition or deletion of stocks from the 50 selected. The basis of changes are shifts in market sentiment, developments within individual companies, or changes in the economy. The index may adjust to these changes and prevent any possible deviation from its planned strategy by rebalancing.

5. Transparency

The methodology used to make and maintain the index is transparent. It is also publicly available. This helps investors understand how each stock is selected and weighted in the index. With ample transparency, investors can quickly assess the suitability of the index as a benchmark or an investment. 

6. Benchmarking

The NIFTY Midcap 150 Momentum 50 Index works as a benchmark to evaluate the performance of different mid-cap momentum investment strategies. Investors and fund managers can compare their investment returns against the index to assess their relative performance.

7. Diversification

The index features stocks from various sectors, keeping the midcap category fairly represented. This guarantees diversity and lowers sector-specific risks. With diversification, individual company risk is also reduced, and sector concentration can be avoided, leading to a potentially stable portfolio. 

8. Investability

The index serves as the basis for various investment products. These include - exchange-traded funds (ETFs), index funds, and structured products. These investment instruments help investors gain exposure to the index's performance as they incorporate the same mid-cap momentum strategies into their portfolios.

What are the key sectors in Nifty Midcap 150 Momentum 50 Index?

The key sectors include: 

Sector

Weightage (%)

Financial Services 

29.18

Healthcare

19.53

Capital Goods 

18.15

Realty

9.01

Metals & Mining 

6.34

Information Technology

5.30

Chemicals 

3.68

Automobile and Auto Components 

3.45

Power

3.30

Construction Materials 

0.65

Textiles 

0.61

Media, Entertainment & Publication 

0.50

Consumer Durables

0.30

What are the Key Midcap Stocks Featured in the Nifty Midcap 150 Momentum 50 Index?

From the broader Nifty Midcap 150 Index, the Nifty Midcap 150 Momentum 50 Index has 50 midcap momentum stocks. As of December 30, 2023, the following table details the top 10 midcap companies included in this index:

Company

Weight

Aurobindo Pharma Ltd.

5.02%

REC Ltd.

4.85%

Power Finance Corporation Ltd.

4.81%

Lupin Ltd

4.46%

Polycab India Ltd.

3.65%

Bharat Heavy Electricals Ltd.

3.53%

Supreme Industries Ltd.

3.27%

Jindal Stainless Ltd.

3.26%

Alkem Laboratories Ltd.

2.97%

NDMC Ltd.

2.91%


Aurobindo Pharma has the highest individual allocation of any stock in this index as of December 31, 2023, at 5.02%. 

How is the Performance of NIFTY Midcap 150 Momentum 50 and Other Indices?

Nifty Midcap 150 Momentum 50 Index has outperformed the NIFTY Midcap 150 Index 100% of the time over the 1-year, 5-year and since inception.

Index Name 

3-Years Returns

5-Years Returns

10-Years Returns

NIFTY Midcap 150

Momentum 50

35.5%

31.2%

27.4%

NIFTY Midcap 150 

26.5%

24.4%

21.7%

NIFTY Smallcap 250

29.5%

24.9%

19.9%

NIFTY 50

14.8%

15.3%

13.4%


Source: https://www.niftyindices.com/indices/equity/strategy-indices/nifty-midcap150-momentum-50

What Are the Returns of NIFTY Midcap 150 Momentum 50?

Here are the returns of NIFTY Midcap 150 momentum 150:

Index Returns (%)

QTD**

YTD**

1 Year

5 Year

Since Inception

Price Return

8.73

8.73

70.10

30.08

23.26

Total Return

9.00

9.00

71.50

31.05

24.55

How to Invest in Nifty Midcap 150 Momentum 50 Index Stocks?

You can invest in the NIFTY Midcap 150 Momentum 50 Index stocks in many different ways. You can either individually buy each of the listed stocks from the stock market or you can invest in them through instruments that track this momentum index. Two such examples are index funds and exchange-traded funds or ETFs. Read on to find out more:

  • Index funds

    Index funds are mutual funds or ULIPs that are designed to replicate the performance of a specific financial market index — which is the NIFTY Midcap 150 Momentum 50 Index in this case.

    An index fund follows a passive investment strategy and aims to match the performance of the index it is tracking. It does not select securities actively. Therefore if you invest in the HDFC Life MidCap Movement Fund it will feature a portfolio comprising of the 50 stocks that constitute the NIFTY Midcap 150 Momentum 50 Index and in the same proportion.

    Through periodic rebalancing the fund manager mainly ensures that the fund's holdings remain consistent with the index. Index funds are more cost-effective than actively managed funds since they require less managerial decision-making.

    The holdings and composition of index funds are typically transparent and publicly disclosed. Investors can therefore check all information related to the securities held in the fund's portfolio and compare its performance to the benchmark index.

  • Exchange-traded funds

    Like individual stocks, exchange-traded funds (ETFs) are financial vehicles that trade on stock markets.

    Among the many indices that they may follow are sector-specific indices, broad market indices, and the NIFTY Midcap 150 Momentum 50 Index.

    To mimic the movement of the underlying index, ETFs store a diversified portfolio of assets. Throughout the trading day, investors can purchase and sell ETFs at market prices, which allows for a high level of liquidity and flexibility.

    The ability to buy and sell exchange-traded funds (ETFs) at any point throughout the trading day gives investors significant leeway to respond to fluctuations in the market. Compared to more conventional mutual funds, exchange-traded funds (ETFs) often offer lower fee ratios, making them a more economical investing option.

    To lessen the impact of any stock's performance, ETFs, similar to index funds, provide investors with exposure to a diverse portfolio of equities.

    Especially for heavy traders, the brokerage fees associated with buying and selling ETF shares may eat into your total return. Investors may end up paying more or less for an exchange-traded fund (ETF) if the market price is different from the NAV.

Although exchange-traded funds (ETFs) are often well-liquid, execution prices and bid-ask spreads are subject to market volatility. Investors may diversify their holdings in the NIFTY Midcap 150 Momentum 50 Index using index funds or exchange-traded funds (ETFs), which provide cost-efficiency, transparency, and efficiency. Picking one over the other is mostly a matter of personal choice, trading style, and financial goals.

HDFC Life Midcap Momentum Fund

You can choose to invest in HDFC Life Midcap Momentum Fund (ULIF07317/01/24MidCpMoIdx101) available only with 4 HDFC Life ULIPs. The index chooses to invest in the top 50 companies within the Nifty midcap 150 index based on momentum score. The companies in the index are selected based on its 6-month and 12-month price return, adjusted for volatility. Stock weights are based on a combination of the stock’s Normalized Momentum Score and its free-float market capitalization. On the other hand, companies in the midcap index are purely based on free float market capitalization.

FAQs On NIFTY Midcap 150 Momentum 50 Index

Q. What is a midcap 150 momentum 50 index?

The NIFTY Midcap 150 Momentum 50 Index is a composition of the top 50 stocks of mid-cap companies, selected based on strong momentum. It offers diversified exposure and acts as a benchmark for mid-cap momentum strategies.

Q. How are the stocks selected in the NIFTY Midcap 150 Momentum 50 Index?

Predefined momentum criteria, which usually include recent price performance, trading volume, and other momentum indicators, are used to pick stocks for inclusion in the NIFTY Midcap 150 Momentum 50 Index. The index gives precedence to stocks that have high momentum characteristics.

Q. What are the benefits of investing in the Nifty Midcap 150 Momentum 50 Index?

The NIFTY Midcap 150 Momentum 50 Index and similar investment products may offer investors several advantages. These include a chance to diversify their holdings within the midcap segment, exposure to midcap stocks with strong momentum characteristics, and the possibility of improved returns through the momentum effect.

Q. Is the Nifty Midcap 150 Momentum 50 Index Fund good?

A person's investment goals, risk appetite, and portfolio strategy should be considered when deciding whether the NIFTY Midcap 150 Momentum 50 Index Fund is a good fit. A transparent and cost-effective way to get exposure to midcap equities with momentum is via index funds. However, do consider factors like the fund's performance, costs, and time horizon.

Q. What are the benefits of investing in the HFDC Life MidCap Momentum Fund?

By putting money into midcap companies showing signs of movement, the HDFC Life MidCap Movement Fund hopes to create long-term capital appreciation. Potential advantages of investing in this fund include diversity within the midcap market. It also offers exposure to growth-oriented midcap companies, and active management by seasoned fund managers. However, before putting money into the fund, research its goals, past performance, fees, and risks.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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^ Please note all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax law.

**QTD, YTD and 1-year returns are absolute returns. Returns for greater than one year are CAGR returns. Data updated as of March 28, 2024.

ARN - MC/03/24/10068

 

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