The Nifty Midcap Index has largely outperformed both Nifty 50 and Nifty Smallcap Indices over the past 10 years.
Noting this trend,brokerage house Jefferies said historically, a phase of disruption has been followed by outperformance in midcap and smallcap indices seen in 2009,2016 and 2017. The trend has continued with both the indices outperforming Nifty50 in calendar year 2020 and year to date 2021.
The Nifty Midcap Index has largely outperformed both Nifty 50 and Nifty Smallcap Indices over the past 10 years, the report said.
Nifty 50 witnessed 53 per cent pull-back since June 1,2020 with the onset of unlocking and business resumption activity in India.
Nifty 50 PE now trades at decadal high levels which is 24 per cent/ 37 per cent premium to its 5-yr/ 10-yr historical average. Nifty 50 now trades at 22 times versus low point of 12 times in March 2020 when India entered the Covid lockdown.
The Nifty Midcap Index has sharply rebounded by more than 70 per cent post June 1,2020 and is now trading at 24 times forward PE which is 29 per cent/53 per cent premium to its 5-yr / 10-yr historical average. Also, the current PE is converging to the pre-Covid peak PE multiple of 26x.
Among the three indices, the NSE Small Cap witnessed the sharpest pullback of 104 per cent since June 1, 2020. However, it still trades at a 10 per cent/ 20 per cent discount to Nifty/NSE Mid Cap indices.
Property stocks, building materials, select industrials feature among the top quartile performers since June 1 2020 with the onset of business resumption.Healthcare stocks have relatively under-performed since 1 June, the report said.
Mid caps saw a sharp rebound post June 2020 as it marked the onset of unlocking and business resumption in India. NSEMCAP (Midcap) has sharply rebounded and outpaced NIFTY.