Why the Nifty Midcap 150 soared to hit record highs despite turbulence in the Indian markets

The Indian markets were in a seesaw motion over the past few sessions, reflecting the tumultuous investor mood since the start of November. October was a stellar month for the benchmark indices, as both the Sensex and the Nifty 50 hit fresh 52-week highs while gaining around 4.5%. Yet they were still trailing behind their historic highs by around 2.5% which were achieved in September 2024.

Meanwhile, the midcap indices have outperformed the benchmark indices in the past six months, with the Nifty Midcap 150 soaring by 11.59%, whereas the Nifty50 grew by only 4.64% as of November 6. The Nifty 500 has shown growth of 3.47%, 7.63%, and 4.50% over the last 3 months, 6 months, and 1 year, respectively. While the headline indices are yet to cross the historic high threshold, the Nifty Midcap 150 soared to hit 22,135.55.

On a year-on-year basis, the broader market index has given returns of 6.6%, marginally lower than Nifty50’s 6.7%, but on a year-to-date basis, the benchmark index gave more than double the Nifty Midcap 150’s returns, each rising by 7.4% and 3.2%, respectively, suggesting that the midcap space has gained momentum only recently. 

In 2020, the Nifty Midcap 150 was at 6,588.35 and has generated returns of 235.99% to date. But after the markets rebounded from the shocks of the Covid-19 pandemic, the gains have been in the range of 84% and 88% on a YoY basis since 2021.

An interesting trend in the P/E ratio of the Nifty Midcap 150

While the Nifty Midcap 150 soared to hit new highs, it is interesting to note that its price-to-earnings (P/E) ratio has been showing a downward trend. On November 4, 2024, the P/E ratio was at 42.88. Still, by the same date this year, it had decreased to 34.15, thereby narrowing the gap with FTSE India, which trades at 22x 12-month forward earnings expectations, making it one of the most expensive markets in the world. 

Analysts at HSBC Global Investment Research have reasoned this decline in P/E. As per their report, “the Flying Dutchman”, they said, “Concerns around elevated multiples have kept many investors on the sidelines, but we argue valuations now are not as much of a headwind as they were a year ago. They have come off after the recent underperformance, both in relation to India’s own history and in comparison to other major Asian peers. In fact, we think India now offers value vs Chinese equities.”

What caused the Nifty Midcap 150 to rally and outperform the rest of the indices?

According to a Motilal Oswal report, large-, mid-, and small-cap stocks accounted for 67%, 22%, and 11% of the total Nifty-500 market cap, respectively. DIIs significantly raised their stakes across market caps to an all-time high, and as of September, midcaps’ market cap share hit a record high, while the large caps’ share neared an all-time low.

Foreign Institutional Investors, or FIIs, were ruthless sellers in 2025, even though they bucked the trend partially in October. As per the same report, FIIs reduced their stakes in large-, mid-, and small-caps by 80 bps, 70 bps, and 60 bps on a YoY basis, but DIIs poured in support. DIIs significantly raised their stakes across market caps by 220 bp, 200 bp, and 140 bp in a span of a year in large-, mid- and small-cap companies in the Nifty 500 universe.  

The midcap index also rose to hit a record high on the back of strong Q2 results for the current financial year. In another report by the same brokerage, it noted that mid-caps (47 companies in its coverage) posted a strong 26% YoY earnings growth, beating the estimate of 19%, continuing their outperformance for the third straight quarter, led by technology, cement, metals, PSU banks, real estate, and NBFCs. While 49 large-cap companies which announced their earnings grew by 13% YoY.

Though the headline indices remain range-bound after a muted year, underlying fundamentals are improving—supported by moderating earnings cuts, diversified sectoral leadership, and robust mid-cap resilience.

Meanwhile, valuations have also eased down, with the price-to-earnings ratio at 34.83 times from last year’s 43.5 times, making the midcap companies attractive for investors.

Which Nifty Midcap 150 stocks have given the best returns in 5 years?

Since 2020, the five companies that have consistently performed well belong to the financial services and capital goods-electrical equipment sector. They are Bombay Stock Exchange Ltd, with a staggering 4653.62% return and a 116.47% CAGR; GE Vernova T&D India Ltd, with 3,803.97% return and a 108.11% CAGR; Apar Industries Ltd (2,821.18%, 96.39%); Hitachi Energy India Ltd (2,100.86%, 85.57%); and Suzlon Energy Ltd (1,940.48%, 82.79%). 

As per the NSE Indexogram dated October 31, the top sectors in terms of weightage are financial services (25.97%), capital goods (14.26%), healthcare (8.44%), automobile and auto components (7.76%) and information technology (6.49%). BSE, a part of the financial services, is also the top constituent, contributing 2.68% to the index. It is followed by Hero MotoCorp Ltd. (1.91%) and Suzlon Energy Ltd. (1.90%). Dixon Technologies (India) Ltd. and Persistent Systems Ltd. both contribute 1.68% each.  

The recent midcap rally thus appears rooted not in speculative momentum but in a mix of domestic inflows, improving earnings, and sectoral breadth, thereby signalling resilience even amid volatile broader markets.