In India, index-based investing has become popular in the last few years. As opposed to picking stocks, many investors now want to invest in an index like the mid cap index, to track and represent many companies.
The mid cap index is a great way to track medium sized businesses-not as big as Reliance or Infosys, but also not as small as small caps that are newly listed. These mid cap companies are often in the growth phase, which is an enticing sector for investors looking for stability and growth.
What Is the Nifty Mid Cap Index?
The Nifty Midcap Index was created by NSE that shows the performance of mid-sized companies in India. There are two main variations.
- Nifty Midcap 100 → The 101st to 200th largest companies by market capitalization.
- Nifty Midcap 150 → Broader index that includes the 101st to 250th ranked companies by market capitalization.
To put it simply, once a company grows out of being a small cap company, but has not yet reached the “giants league” of large companies, it is most likely a mid cap company.
Why is this important?
- These companies, generally, are still in the business growth phase.
- They have greater growth potential than already established large caps.
- They are less risky than small caps.
The mid cap index works as a simple portfolio for investors that represents a couple of sensible businesses, while at the same time allows for simple tracking of this market like a ETF without all of the research on individual stocks.
Mid Cap Index Features
Here’s why mid caps are often called the “sweet spot” for many investors.
- Sector Diversification
The mid cap index does not consist of one industry. You will find companies in:
- Industrials
- Automobiles
- Banking & Finance
- Pharmaceuticals
- Consumer Goods
This diversification minimizes the risk of being tied to one sector.
- Greater Return Potential than Large Ups
Because mid cap companies are still expanding, they can often realize earnings growth rate increases faster than any large company. Over long time frames, this has realized higher returns than large cap indices. - Balance of Risk vs Small Caps
Small caps can be very volatile up and down over short time frames. Mid caps balance the risk by being more stable than small caps, but still potentially growing at a higher rate than large caps. - Growth Visibility
Most mid cap companies are leaders in these niche industries. In addition, since mid cap companies are followed less often by analysts, smart investors may find a diamond in the rough before they make the front page. - Used by Many Mutual Funds & ETFs
A lot of mid cap mutual funds in India use the Nifty Midcap 150 as their benchmark. As a result, when you purchase these funds, you are investing in this index at the same time.
Top 10 Companies in the Nifty Midcap Index (2025)
Captain websites of the Nifty Midcap segment currently:
- Polycab India (Cables & Wires)
Market Cap: ~₹1.2 lakh crore | Strong demand for electrical goods & rural electrification. - Trent Ltd (Retail – Tata Group)
Market Cap: ~₹1.6 lakh crore | Growing chain of retail fashion, strong brand presence.
- Tube Investments of India (Engineering)
Market Cap: ~₹1.3 lakh crore | India plays on top of auto and infra growth. - Aarti Industries (Chemicals)
Market Cap: ~₹35,000 crore | Important player in specialty chemicals, particularly with growing exports. - MRF (Tyres)
Market Cap: ~₹40,000 crore | Premium tyre manufacturing company which has strong pricing power.
- Voltas (Consumer Durables)
Market Cap: ~₹27,000 crore | Company manufacturing cooling solutions and home appliances owned by Tata.
- Aditya Birla Capital (Financial Services)
Market Cap: ~₹60,000 crore | Growing vertically with lending, insurance, and assets management business lines.
- Crompton Greaves Consumer (Electronics)
Market Cap: ~₹28,000 crore | Household name in fan, light, and appliances categories.
- Indian Hotels Company (Hospitality – Tata Group)
Market Cap: ~₹70,000 crore | Benefitting from journey, tourism and growth and quality of premium hotels industry.
- PI Industries (Agrochemicals)
Market Cap: ~₹70,000 crore | Agro intervention, focusing on solutions in agriculture and export.
(Note: Market Cap ranges are approximate and example, they change with movements in the market)
How the Mid Cap Index Relates to Other Indices
Large Cap Stocks
If you are more likely to play it safe with your investments, large cap stocks might be an option for you. Large cap stocks are the top 100 companies, aka are the titans like HDFC Bank, Reliance, or TCS. Large-cap stocks are the major constituents of indices like Nifty 50 and Nifty 100.
If you’re looking for more stable, low-risk investments, check out our complete large cap stock investors guide and why they are considered the backbone for most people’s portfolios.
Small Cap Stocks
On the flip side, if you’re looking for a quick hit and don’t mind the risks along the way, small cap stocks will bring those investors in. These rank from #251 and onward; they are smaller companies that have the best growth potential, but they also have the best chances of failing.
For those interested in investing with small cap stocks, we have explained how to look for value in the small cap space without succumbing to pure risk.
So, in short:
- Large Caps = Safety
- Mid Caps = Safety/Risk/Reward Balance
- Small Caps = Risk/Reward/High Growth
Should You Invest in the Mid Cap Index?
Mid caps are generally best suited to investors who:
- Have a mid-range risk profile (a little safer than unsafe and a little riskier than safe
- Are investing for the long haul (5-or-more years).
- Want exposure to companies that could be future large caps.
It’s easy to gain exposure by investing in:
- Index Mutual Funds → Guarantees exposure to all mid cap companies.
- ETFs (Exchange Traded Funds) → This product trades like a stock on the NSE/BSE.
Pro Tip: Don’t put all your eggs in the mid-cap basket. Mix mid caps with large and small caps to have a balanced portfolio and periodically (once a year) rebalance them to manage risk
Mid Cap Index ETFs and Mutual Funds
These are some of the widely available options in India:
- Nippon India Nifty Midcap 150 Index Fund
- Expense Ratio: ~0.3%
- The fund tracks the Nifty Midcap 150 Index directly.
- Expense Ratio: ~0.3%
- Motilal Oswal Midcap 150 ETF
- Index Exchange Traded Fund that trades like a stock on NSE/BSE.
- Low cost, transparent.
- ICICI Prudential Midcap Index Fund
- Great for steady investors looking to SIP.
- A diversified composition of 150 mid cap companies.
- HDFC Nifty Midcap 150 ETF
- Easy to invest via your demat account, and there is good liquidity across exchanges.
- Easy to invest via your demat account, and there is good liquidity across exchanges.
Index mutual funds are easier to access for a beginner so you won’t need a demat account whereas ETFs are better suited for those not uncomfortable to trade.
Risks and Considerations
Before diving into mid caps, you should consider these risks:
- Higher Volatility → Mid caps may have a deeper descent during bear markets.
- Liquidity Risk →Some mid cap stocks have lower volumes than large caps so getting in and out may be slightly more challenging.
- Less Media Attention→ Mid caps lack the media attention that large caps enjoy so you’ll need to you have to exercise more discipline and research.
- Cyclical Performance → They may outperform their counterparts when the market is up but underperform when the market is down.
This inherent risk is why mid caps are better for long term investors who are willing to ignore short term fluctuations.
Conclusion
In conclusion, the mid cap index is a great happy medium for investors— not as consistent as large caps but also not as risky as small caps. It’s the happy medium growth potential and risk.
If you are looking for long term wealth, adding mid caps using index funds or ETFs may an appropriate option.
Are you an investor of mid cap stocks or index funds? Let us know your thoughts in the comments, and please share this with your investor network.