THE YEAR BELONGED TO THE MID-CAPS
You can almost be certain that if the Nifty and the Sensex have generated returns in the range of 18% to 20% in 2023, then mid-caps would have surely done better. And, better they certainly did, as the Nifty Mid-Cap 100 generated returns of 48.91% in the last one year. That is phenomenal returns, even if you consider the fact that mid-caps are higher on the risk scale than the large cap stocks. There are concerns over valuations, but these concerns may be more out of anecdotal evidence than anything else. To get a 360 degree performance view of the mid-cap universe in India, we shall look at 4 key attributes of outperformance; momentum, fundamentals, resilience, and swing. For each of these attributes, there will be a proxy. For instance, 1-month returns will represent momentum, 1-yaer returns will represent fundamentals, bounce from 52-week low will represent resilience, while the proximity to the 52-week high will represent swing factor.
Nifty Mid-Cap 100 Index (The Momentum Story)
Let us start with the momentum story of the Nifty Mid-Cap 100 Index using the 1-month returns as the proxy. For the Nifty Mid-Cap 100 index as a whole, monthly returns were 3.27%. Out of the 50 stocks in the Nifty 50 index, 4 stocks were eliminated due to paucity of full date due to various reasons. Out of the remaining 96 stocks, 56 stocks gave positive returns and 40 gave negative returns in the last one month. The 1-month return column is shaded.
Stock |
Market Price |
1-Month Return |
1-Year Return |
52-week High |
52-week Low |
Bounce from Low |
Distance to High |
IRFC |
174 |
65.01% |
391.02% |
193 |
25 |
584.84% |
10.84% |
RVNL |
302 |
63.23% |
279.19% |
346 |
56 |
439.34% |
14.29% |
GUJGASLTD |
550 |
23.72% |
17.49% |
572 |
397 |
38.63% |
3.90% |
PETRONET |
257 |
21.34% |
14.70% |
266 |
192 |
34.30% |
3.44% |
MAXHEALTH |
739 |
19.59% |
74.81% |
805 |
412 |
79.41% |
8.88% |
APOLLOTYRE |
517 |
19.38% |
61.44% |
546 |
303 |
70.53% |
5.48% |
HINDPETRO |
431 |
19.27% |
75.90% |
477 |
212 |
103.85% |
10.56% |
JSWENERGY |
483 |
18.47% |
96.44% |
516 |
205 |
136.01% |
6.87% |
UNIONBANK |
140 |
18.35% |
71.72% |
145 |
60 |
132.23% |
3.75% |
MRF |
1,36,750 |
17.95% |
56.18% |
1,50,254 |
81,380 |
68.04% |
9.88% |
Data Source: NSE
What are the sectors that are showing momentum over the last one month. The momentum clearly appears to be in favour of the PSU stocks. In fact, PSU stocks account for 6 out of the 10 best stocks in the Nifty Mid-Cap 100 index, showing the amount of momentum that is there in PSU mid-cap stocks. In the last one month, there were 2 stocks that gained more than 50%, while 21 stocks in the Nifty Mid-cap 100 index gained more than 10% during the last one month. Mid-sized banks and PSU railway stocks dominated this space, due to expectations of higher allocations to the Railways in Union Budget 2024-25.
What is the story of the laggards in the Nifty Mid-Cap 100 index on one-month returns? The laggards were largely news driven. The worst performer for the month with losses of over 41% was Zee and that was largely due to the Sony merger deal falling through. Polycab, a company that had seen a series of tax raids across its offices in recent months, also lost more than 22% in the month. Sun TV, Navin Fluorine, Jubilant Foods, Dixon Industries and Bata India were among other losers in this list.
Nifty Mid-Cap 100 index (The Fundamental story)
If the momentum story above captured the short term moves, the fundamental picture is better captured by 1-year returns. For the Nifty Mid-Cap 100 index as a whole, annual returns were strong at 48.91%. Out of the 96 stocks in the Nifty Mid-Cap 100 index with full data available, 86 stocks gave positive returns and only 10 stocks gave negative returns in the last one year period. The 1-year return column is shaded.
Stock |
Market Price |
1-Month Return |
1-Year Return |
52-week High |
52-week Low |
Bounce from Low |
Distance to High |
IRFC |
174 |
65.01% |
391.02% |
193 |
25 |
584.84% |
10.84% |
RVNL |
302 |
63.23% |
279.19% |
346 |
56 |
439.34% |
14.29% |
RECLTD |
469 |
6.92% |
249.62% |
482 |
110 |
324.54% |
2.79% |
MAZDOCK |
2,356 |
7.34% |
194.38% |
2,492 |
612 |
284.98% |
5.77% |
PFC |
418 |
2.24% |
161.95% |
430 |
106 |
292.85% |
2.91% |
PRESTIGE |
1,173 |
1.93% |
158.25% |
1,440 |
391 |
200.03% |
22.75% |
AUROPHARMA |
1,145 |
6.30% |
154.26% |
1,174 |
397 |
188.29% |
2.52% |
BHEL |
219 |
13.83% |
153.05% |
226 |
66 |
229.94% |
3.09% |
FACT |
884 |
2.20% |
146.58% |
908 |
192 |
360.60% |
2.67% |
KPITTECH |
1,406 |
-2.46% |
115.18% |
1,640 |
688 |
104.43% |
16.64% |
Data Source: NSE
What are the sectors that are showing momentum over the last one month? In terms of the story in the mid-caps, it is still the PSUs that dominate even the 1-year return story. In fact, if you look at the top-10 stocks on 1-year returns in the mid-cap index, 7 out of the 10 are PSU stocks once again. They come in all hues and include railway stocks, power stocks and even defence stocks. Based on annual returns, there were 13 out of the Nifty-Mid-Cap 100 stocks that generated more than 100% returns, while 37 out of the 96 index companies generated more than 50%. A total of 63 out of the 96 companies yielded more than 20% returns, so even if you had selected a mid-cap index stock at random, there was a 66% probability that you would still be in the best performing asset class.
What is the story of the laggards in the Nifty Mid-Cap 100 index on one-year returns? These are largely stock specific stories that you find here, which makes the 1-year list more reliable in terms of bottom-up stories. Zee was once again the worst performer falling more than 30%, largely due to the recent failure of the merger. Navin Fluorine also struggled due to the downcycle in global chemicals demand and the pricing. Among other mid-cap stocks that gave negative returns for the last one year were Aditya Birla Fashions, Astral, Bandhan Bank, Page Industries, Crompton Greaves, and Bata India.
Nifty Mid-Cap 100 Index (The Resilience Story)
We look at resilience in terms of the extent of bounce from the lows of the year. That may not be a precise proxy, but it comes fairly close. For the Nifty Mid-Cap 100 index as a whole, the bounce from the low of the year was a full 61.18%. Out of the 96 stocks in the Nifty Mid-Cap 100 index, an amazing 27 stocks bounced more than 100% from the lows (doubled from lows), while 57 stocks bounced more than 50% from the lows and a total of 89 stocks showed a bounce of at least 20% from the lows of the year. The resilience in terms of bounce from the 52-week lows is indicated by the shaded column.
Stock |
Market Price |
1-Month Return |
1-Year Return |
52-week High |
52-week Low |
Bounce from Low |
Distance to High |
IRFC |
174 |
65.01% |
391.02% |
193 |
25 |
584.84% |
10.84% |
RVNL |
302 |
63.23% |
279.19% |
346 |
56 |
439.34% |
14.29% |
FACT |
884 |
2.20% |
146.58% |
908 |
192 |
360.60% |
2.67% |
RECLTD |
469 |
6.92% |
249.62% |
482 |
110 |
324.54% |
2.79% |
PFC |
418 |
2.24% |
161.95% |
430 |
106 |
292.85% |
2.91% |
MAZDOCK |
2,356 |
7.34% |
194.38% |
2,492 |
612 |
284.98% |
5.77% |
BHEL |
219 |
13.83% |
153.05% |
226 |
66 |
229.94% |
3.09% |
PRESTIGE |
1,173 |
1.93% |
158.25% |
1,440 |
391 |
200.03% |
22.75% |
LODHA |
1,052 |
14.50% |
-1.96% |
1,226 |
356 |
195.86% |
16.56% |
AUROPHARMA |
1,145 |
6.30% |
154.26% |
1,174 |
397 |
188.29% |
2.52% |
Data Source: NSE
Once again, no prizes for guessing. 7 out of the top 10 stocks in terms of resilience from the lows were the PSU stocks and they were the same 7 PSU stocks that also featured in the fundamental ranking list. This is an indication that the bounce in these stock was not just a dead-cat bounce, but a bounce to win. The non-PSU stocks in the top-10 list were Prestige, Lodha and Aurobindo Pharma, a clear bias towards real estate companies, showing the sharp recovery in housing demand across geographies.
Let us also focus on the laggards, or the stock that really struggled to bounce from the lows of the year in the mid-cap index. There were a total 7 stocks out of the 96 stocks that bounced less than 20% from the lows, hinting that there were closer to their lows during the year. Navin Fluorine closed near to the low of the year due to the downcycle in the chemicals segment during the year and that showed in its performance also. Page Industries struggled to maintain its erstwhile premium valuations amidst rising competition from organized retail. Zee was another story that was hit by the failure of the Sony merger. The only Tata group company that finds at the bottom of the list is Tata Chemicals.
Nifty Mid-Cap 100 (The Swing story)
Let us finally look at the top ranked swing stocks for the year, wherein we use the proximity to the 52-week high as the proxy. Here is the logic for the measure. The closer the stock is to the 52-week high, the higher is the swing factor. In fact, the Nifty Mid-Cap 100 index itself is just about 3.03% short of the 52-week high, which is the level it had just touched towards the end of December 2023. Out of the 96 stocks in the Nifty Mid-Cap 100 index, 23 stocks are less than 5% away from their 52-week highs, while a total of 45 stocks are less than 10% away from their 52-week high levels. The column for proximity to the 52-week high (a proxy for the swing factor) has been shaded.
Stock |
Market Price |
1-Month Return |
1-Year Return |
52-week High |
52-week Low |
Bounce from Low |
Distance to High |
ACC |
2,444 |
5.61% |
-4.97% |
2,445 |
1,592 |
53.48% |
0.04% |
LUPIN |
1,452 |
13.77% |
88.00% |
1,470 |
628 |
131.15% |
1.25% |
GODREJPROP |
2,323 |
15.08% |
84.09% |
2,357 |
1,005 |
131.15% |
1.47% |
CUMMINSIND |
2,157 |
4.20% |
47.00% |
2,191 |
1,358 |
58.76% |
1.60% |
NHPC |
83 |
17.39% |
77.45% |
85 |
38 |
120.53% |
2.10% |
AUROPHARMA |
1,145 |
6.30% |
154.26% |
1,174 |
397 |
188.29% |
2.52% |
LICHSGFIN |
575 |
8.40% |
42.50% |
590 |
315 |
82.55% |
2.57% |
FACT |
884 |
2.20% |
146.58% |
908 |
192 |
360.60% |
2.67% |
RECLTD |
469 |
6.92% |
249.62% |
482 |
110 |
324.54% |
2.79% |
TIINDIA |
4,009 |
9.59% |
51.96% |
4,125 |
2,375 |
68.79% |
2.90% |
Data Source: NSE
What are the sectors that are showing the best swing in terms of proximity to their 52-week highs. Once again there are 3 PSU companies in this list, which is not too surprising considering the sharp spike in these stocks. ACC is almost a the high and, as part of the Adani group now, one can imagine that it is one of the stock to have shown a good bounce, but still recovering from the overhang of the last one year. Among the private players, Aurobindo, Lupin, Godrej Properties and Cummins find themselves in the swing list.
What is the story of the laggards in the Nifty in terms of proximity to the 52-week highs. The story, once again, reads like a very familiar script. At the bottom of the heap, you have stocks like stocks like Zee Entertainment, Polycab and Navin Fluorine for obvious reasons that we have already seen. Paytm is in this list of low swing stocks despite that rally. That can be attributed to two factors; the heavy PE fund selling this year and the decision by Paytm to exit the low value lending business.
High conviction plays in the Nifty Mid-Cap 100 index
One way to check the conviction of outperformance, is to look at the stock that have outperformed on multiple parameters. Here we look at the common factors across momentum, fundamentals, resilience, and swing. Here are the quick takeaways.
Looking at a multi-dimensional view of performance provides us a much sharper view of the best and worst performers and can also give guidance for the future.
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