Mid-Caps To Dominate Market Returns

Mid-caps have created wealth for investors over the years and are extremely popular amongst retail investors. Investors are attracted towards mid-caps because of high growth opportunities offered by some of the quality names. Yogesh Supekar explores investing opportunities in the mid-cap space while highlighting some of the top performing mid-caps in recent years

- Yogesh Supekar

Mid-cap investing is one of the most rewarding experiences for investors globally. Going by historical data, mid-cap stocks have always offered better growth potential than the large-caps and at the same time have also offered better liquidity than the small-caps. Thus, mid-caps are almost always in a sweet spot owing to their liquidity and growth potential. If we check the performance of the BSE Mid-Cap index, it gives us a better picture of relative performance.

According to Rishi Kohli, CIO (Hedge Fund Strategies), InCred Alternatives, "The big trendline resistance of the last one-year consolidation that lies around 17,850 was touched on Tuesday, August 30 and this happening on a monthly closing is significant. The fact that the Bank Nifty index had broken above a similar trendline a month back and the Mid-Cap index has also broken above a similar trendline resistance a couple of weeks back and taken support there in the last two weeks' decline and then bounced back strongly this week corroborates the medium-term bullishness in the Indian equity markets.

"In fact, the Mid-Cap index had retraced only 38 per cent of the rally from March 2020 to October 2021 in last year's consolidation and then broken above the channel which is very bullish. The ratio chart of a Nifty Mid-Cap index to Nifty Large-Cap index has also given a medium-term breakout which is supportive of the bullishness in the broader markets and points to near-term outperformance of mid-caps to large-caps, he adds. So, what are mid-caps and how to and how much to invest in them?