Midcap index on Cloud Ten, select larger stocks power index to new high
On Tuesday, the S&P BSE MidCap index touched a new high, while the benchmark Sensex and Nifty were trading near their previous peaks.
The midcap index has gained 13% since the beginning of January compared with 8% gain in the benchmarks.
A closer look at the performance of the midcap index reveals that it is buoyed by 10 large companies in the index which may not be classified as midcaps considering their market capitalisation, which is between Rs 20,000 crore and Rs 57,000 crore. There are 15 Nifty stocks whose m-cap falls in that range.
The 10 companies that drove the performance of the midcap index include Bajaj Finserv, Hindustan Petroleum and JSW Steel. The 10 stocks contributed nearly 22% of the total BSE Midcap upmove in the past one year.
These companies contributed nearly 40% to total net profit and 23% to revenue of the BSE Midcap index. This attracted the attention of investors thereby taking the trailing price-earnings ratio of the midcap index to 28 compared to 22 for the benchmarks. The valuation premium of the Midcap index to the benchmarks has expanded to 30% against the 10-year average of 11%.
Fund managers, too, have been keen on adding them. For instance, HPCL accounts for 2-3% of the midcap funds of HDFC, Birla Sun, and Kotak. Similarly, Bajaj Finserv constitutes 4.6% of the ICICI Pru Midcap Fund and 5.1% of the Axis Midcap Fund.
The midcap index has gained 13% since the beginning of January compared with 8% gain in the benchmarks.
A closer look at the performance of the midcap index reveals that it is buoyed by 10 large companies in the index which may not be classified as midcaps considering their market capitalisation, which is between Rs 20,000 crore and Rs 57,000 crore. There are 15 Nifty stocks whose m-cap falls in that range.
The 10 companies that drove the performance of the midcap index include Bajaj Finserv, Hindustan Petroleum and JSW Steel. The 10 stocks contributed nearly 22% of the total BSE Midcap upmove in the past one year.
These companies contributed nearly 40% to total net profit and 23% to revenue of the BSE Midcap index. This attracted the attention of investors thereby taking the trailing price-earnings ratio of the midcap index to 28 compared to 22 for the benchmarks. The valuation premium of the Midcap index to the benchmarks has expanded to 30% against the 10-year average of 11%.
Fund managers, too, have been keen on adding them. For instance, HPCL accounts for 2-3% of the midcap funds of HDFC, Birla Sun, and Kotak. Similarly, Bajaj Finserv constitutes 4.6% of the ICICI Pru Midcap Fund and 5.1% of the Axis Midcap Fund.
