NSE mid-cap gives better return than Nifty in 1st year of Modi government

Buoyed by robust investor sentiment, the mid-cap index of National Stock Exchange (NSE) has rallied by 30%, outperforming the larger index Nifty, in the first year of the Modi government.

The mid-cap index of the NSE has given a return of 29.97% since the NDA government led by Narendra Modi took charge on May 26 last year, while gain in the 50-share Nifty has been at 16.65% during the same period, an analysis of the indices showed.

However, small-cap has given a return of 15.59% during this period.

Further, all the sectoral indices barring realty and PSU banks have given positive returns.

Pharma has given a return of 62.22%, followed by auto (33.70%), IT (29.04%), finance (26.66%) and bank (26.55%).

On the other hand, realty index dropped by 17.88% and PSU bank slipped by 3.15%.

According to market experts, when markets perform well, smaller stocks make big gains than the front-lines. But during times of uncertainty, greater losses are seen in mid and small-cap stocks.

The bullish investor sentiment following a new government at the Centre and robust foreign fund inflows have been fuelling the rally in the domestic equity market, experts added.

Since Modi took charge, overseas investors have infused over Rs 93,000 crore into the Indian equities, while they invested Rs 1.6 lakh crore into the debt market taking the total to Rs 2.52 lakh crore.

Retail investors are major participants in mid-cap and their activity in this segment has been upbeat over the past few months.

Market players say smaller stocks are generally bought by local investors, while overseas investors focus on blue-chip shares.

Mid-cap index tracks companies with a market value that is on an average one-fifth of blue-chips or large firms, small-cap firms are almost a tenth of that.