When people talk about the Indian stock market, most of the time they mention large companies like Reliance or TCS. But between large companies and small companies, there is another powerful segment called mid-cap companies. These companies have strong growth potential and play an important role in India’s economy.
To track the performance of such companies, the stock market uses a special index called Nifty Midcap 100.
In this blog, you will learn everything about Nifty Midcap 100 in very simple language. We will cover its meaning, how it is calculated, its performance, benefits, risks, and how you can invest in it using real-life examples and easy calculations.
What Is Nifty Midcap 100?
Nifty Midcap 100 is a stock market index that represents the performance of 100 mid-sized companies listed on the National Stock Exchange (NSE) of India.
In simple words
- It shows how 100 mid-cap companies are performing together.
- These companies are bigger than small-cap companies but smaller than large-cap companies.
- It helps investors understand the overall trend of the mid-cap market.
You cannot buy the index directly, but you can invest in products that follow this index.
What Are Mid-Cap Companies?
Mid-cap companies are businesses that are in the growth stage.
General market value range
- Mid-cap market value: approx. ₹5,000 crore to ₹20,000 crore
Characteristics of mid-cap companies
- Growing faster than large companies
- More stable than small companies
- Higher risk than large-cap stocks
- Higher return potential over the long term
Because of this balance of growth and risk, many long-term investors like mid-cap stocks.
History of Nifty Midcap 100
- The index was launched to track the mid-cap segment of the Indian stock market.
- It uses a base year with a base value (for example, 1000).
- Over time, the value of the index changes based on the prices of its 100 companies.
If the index value rises, it means most mid-cap companies are doing well.
If it falls, it means mid-cap stocks are under pressure.
How Are Companies Selected for Nifty Midcap 100?
The 100 companies in the Nifty Midcap 100 are selected based on strict rules.
Main selection criteria
- Market capitalization (mid-cap range)
- Liquidity (shares should be actively traded)
- Trading volume
- Free-float shares (shares available for public trading)
The index is reviewed twice a year.
Some companies are removed, and new ones are added to keep the index updated.
How Is Nifty Midcap 100 Calculated?
The index is calculated using the free-float market capitalization method.
Formula (simplified)
Index Value = (Total Free-Float Market Cap / Base Market Cap) × Base Value
Example of Index Calculation
Let’s understand with a simple example.
Assume
- Base value = 1000
- Base market capitalization = ₹10,00,000 crore
- Current free-float market capitalization = ₹15,00,000 crore
Calculation
Index Value = (15,00,000 ÷ 10,00,000) × 1000
Index Value = 1.5 × 1000
Index Value = 1500
This means the index has grown 50% since the base year.
Sector Composition of Nifty Midcap 100
The index is well diversified across many sectors.
Common sectors included
- Financial services
- Information technology
- Pharmaceuticals
- Industrial manufacturing
- Consumer goods
- Chemicals
- Energy
- Infrastructure
This diversification reduces dependency on a single sector and improves stability.
Performance of Nifty Midcap 100 Over Time
The Nifty Midcap 100 is known for delivering strong long-term returns, but it can be volatile in the short term.
General performance pattern
- Performs very well during economic growth
- Falls more than large-cap indices during market crashes
- Recovers faster during bull markets
Return Example (Easy Calculation)
Let’s say:
- You invested ₹1,00,000 in a fund tracking Nifty Midcap 100
- Average annual return = 14%
- Investment period = 10 years
Calculation using compounding
Future Value = 1,00,000 × (1.14)^10
Future Value ≈ ₹3,70,000
Your money becomes almost 3.7 times in 10 years.
Nifty Midcap 100 vs Other Indices
| Index | Type | Risk Level | Growth Potential |
| Nifty 50 | Large-cap | Low | Moderate |
| Nifty Midcap 100 | Mid-cap | Medium | High |
| Nifty Smallcap 100 | Small-cap | High | Very High |
Nifty Midcap 100 offers a balance of risk and return, making it attractive for long-term investors.
How to Invest in Nifty Midcap 100?
You cannot invest directly in the index, but you can invest through:
1. Index Mutual Funds
- Designed to copy the performance of Nifty Midcap 100
- Suitable for long-term investors
- Lower expense ratio than active funds
2. ETFs (Exchange Traded Funds)
- Traded like shares on the stock exchange
- Need a Demat account
- Prices change during market hours
SIP Example for Better Understanding
Suppose you invest:
- ₹5,000 per month
- Time period = 15 years
- Average return = 13%
Total investment
₹5,000 × 12 × 15 = ₹9,00,000
Estimated value after 15 years
₹22–25 lakh (approx.)
This shows the power of long-term investing in mid-cap indices.
Advantages of Nifty Midcap 100
1. High Growth Potential
Mid-cap companies can grow into large-cap companies over time.
2. Diversification
100 companies across multiple sectors reduce risk.
3. Long-Term Wealth Creation
Historically, mid-cap indices perform well over long periods.
4. Lower Cost Investment
Index funds and ETFs have lower management costs.
Risks of Nifty Midcap 100
1. Higher Volatility
Mid-cap stocks fluctuate more than large-cap stocks.
2. Market Downturn Impact
During economic slowdown, mid-cap stocks may fall sharply.
3. Short-Term Loss Possibility
Not ideal for short-term or emergency investments.
Who Should Invest in Nifty Midcap 100?
This index is suitable for:
- Long-term investors (10+ years)
- Investors with moderate risk appetite
- People already investing in large-cap funds
- SIP investors aiming for wealth creation
Not suitable for:
- Short-term traders
- Risk-averse investors
- People needing quick returns
Taxation on Nifty Midcap 100 Investments
Equity taxation rules
- Short-term capital gain (less than 1 year): 15%
- Long-term capital gain (more than 1 year):
10% on gains above ₹1 lakh per year
Common Myths About Nifty Midcap 100
Myth 1: Mid-cap means unsafe
👉 Reality: Risk is higher than large-cap but manageable with long-term investing.
Myth 2: One-time investment is better
👉 Reality: SIP reduces market timing risk.
Myth 3: Index funds give low returns
👉 Reality: Over time, index funds often beat many active funds.
Also Read: Budgeting Tool: Manage Your Money Smartly
Conclusion
The Nifty Midcap 100 is one of the most important indices for investors who want growth with reasonable risk. It represents strong mid-sized companies that have the potential to become future market leaders.
If you are planning long-term investment, already have exposure to large-cap funds, and can handle market ups and downs, investing in products based on Nifty Midcap 100 can be a smart decision.
As always, focus on long-term goals, use SIP, and stay invested through market cycles to get the best results.