Nifty 100 vs Nifty Midcap 150: Top 10 points for Long-Term Investors
When starting a long-term investment journey, picking the correct index is key to obtaining both return and stability in your portfolio. The ongoing debate on Nifty 100 versus Nifty Midcap 150 has captured the attention of many investors who view these indices as having their own unique benefits. While Nifty 100 is much synonymous with stability, Nifty Midcap 150 is often associated with higher returns but also carries more risks. This comprehensive guide seeks to unravel the complexities surrounding both indices including performance analysis, financial metrics and expert opinions so that you can make an informed choice regarding your investment goals.
Table of Contents
1. About the Indices: Nifty 100 vs Nifty Midcap 150
Overview of Nifty 100
The Nifty 100 index includes the 100 biggest firms listed on the National Stock Exchange (NSE) in India. It is a large scale index that includes the biggest and most stable companies from various fields. With regard to measuring how well large-cap businesses are doing, the Nifty 100 serves as a standard and it also embraces well-performing market leaders characterised by solid finances, consistent growth and low volatility levels.
- Market Capitalization: The Nifty 100 comprises companies with large market capitalizations, often considered blue-chip stocks.
- Stability: The index is known for its stability and relatively lower risk, making it a preferred choice for conservative investors.
- Diversification: It covers a broad range of sectors, providing diversified exposure to the Indian economy.
Overview of Nifty Midcap 150
The Nifty Midcap 150 index is composed of the best 150 in terms of mid-cap segment companies. These firms are often found at an early stage, meaning they offer considerable profits albeit some risks. If you want to make the most of huge growth possibilities in mid-range capital, then investing in Nifty Midcap 150 would be a wise decision.
- Growth Potential: The companies in the Nifty Midcap 150 are generally expanding, with the potential for rapid growth and higher returns.
- Volatility: With higher growth comes higher volatility, making this index suitable for investors with a higher risk tolerance.
- Sectoral Exposure: The index provides exposure to sectors that may not be as prominent in large-cap indices, offering diversification benefits.
2. Nifty 100 vs Nifty Midcap 150: Performance Analysis
Year-to-Date (YTD) Performance
In 2024, the Nifty Midcap 150 significantly outperformed the Nifty 100. As of the latest data, the Nifty Midcap 150 has gained over 28%, while the Nifty 100 has risen by 20%. The benchmark Nifty index increased by 16% during the same period.
YTD Performance Comparison
| Index | YTD Performance (2024) |
| Nifty 100 | +20% |
| Nifty Midcap 150 | +28% |
| Nifty Benchmark | +16% |
Analysis: The increased returns performance of Nifty Midcap 150 is indicative of its power particularly in a bullish market setting. Yet, Nifty 100 steady income shows that it is consistent and less risky.
One-Year Performance
Over the past year, the Nifty Midcap 150 has surged by an impressive 48%, outpacing the Nifty 100, which grew by 35.5%. The benchmark Nifty rose by 30% during the same period.
One-Year Performance Comparison
| Index | One-Year Performance |
| Nifty 100 | +35.5% |
| Nifty Midcap 150 | +48% |
| Nifty Benchmark | +30% |
Analysis: In terms of performance, the Nifty Midcap 150 continues to lead, making it an appealing proposition for those looking at higher returns. However, investors seeking a lower risk option may consider Nifty 100 as it is less volatile than midcaps.
Long-Term Performance
Looking at the three-year performance, the Nifty Midcap 150 has delivered multibagger returns, soaring by 110%, while the Nifty 100 has grown by 53%. The benchmark Nifty index gained 49% over the same period.
Three-Year Performance Comparison
| Index | Three-Year Performance |
| Nifty 100 | +53% |
| Nifty Midcap 150 | +110% |
| Nifty Benchmark | +49% |
Analysis:Over a lengthy period, it is evident that Nifty Midcap 150 has performed better than Nifty 100, thus exhibiting its scope for remarkable growth. Nevertheless, it is associated with elevated volatility which is likely difficult for conservative investors.
3. Financial Metrics and Comparative Analysis of Nifty 100 vs Nifty Midcap 150
Price-to-Earnings (PE) Ratios
For assessing index valuation, PE ratio is an important factor to consider. Nifty 100’s PE ratio hovered around 24 times while Nifty Midcap 150 commanded an even higher one at approximately 30 times as of 2024. Thus, midcap firms are presumed to grow more in future, however their stock prices seem to be excessive when contrasted with those of big companies.
PE Ratio Comparison
| Index | PE Ratio (2024) x |
| Nifty 100 | 24x |
| Nifty Midcap 150 | 30x |
Analysis: In general, the Nifty Midcap 150 has a higher PE ratio indicating that the market is optimistic about its growth. But it also indicates that midcap shares are pricier in relation to their profits and this may cause corrections if growth anticipations are not achieved.
Volatility and Beta Analysis
Volatility is a measure of the price fluctuations of an index. The Nifty 100, being a large-cap index, exhibits lower volatility, with a beta of 0.95. In contrast, the Nifty Midcap 150 has a beta of 1.25, indicating higher volatility and a greater sensitivity to market movements.
Volatility and Beta Comparison
| Index | Beta | Volatility |
| Nifty 100 | 0.95 | Low |
| Nifty Midcap 150 | 1.25 | High |
Analysis: Conservatives find it suitable due to its low volatility. On the contrary, higher beta of the Nifty Midcap 150 signals for greater risk but also possibility of higher returns when market rises.
Dividend Yields
Dividend yield is another critical factor to consider. The Nifty 100, with its mature, large-cap companies, offers a higher dividend yield of 1.5%. The Nifty Midcap 150, focused on growth, has a lower dividend yield of 0.8%.
Dividend Yield Comparison
| Index | Dividend Yield (2024) |
| Nifty 100 | 1.5% |
| Nifty Midcap 150 | 0.8% |
Analysis: Conservatives find it suitable due to its low volatility. On the contrary, higher beta of the Nifty Midcap 150 signals for greater risk but also possibility of higher returns when market rises.
4. Nifty 100 vs Nifty Midcap 150: Sectoral Composition and Impact
Nifty 100 Sectoral Breakdown
The Nifty 100 is heavily weighted towards sectors such as financial services, information technology, and energy. These sectors are critical to the Indian economy, providing stability and steady growth.
Nifty 100 Sectoral Composition
| Sector | Weightage |
| Financial Services | 35% |
| Information Technology | 18% |
| Energy | 15% |
| Consumer Goods | 10% |
| Others | 22% |
Nifty Midcap 150 Sectoral Breakdown
The Nifty Midcap 150 has a more diversified sectoral composition, with significant exposure to industries such as industrial manufacturing, consumer durables, and pharmaceuticals. This diversification can lead to higher growth but also increased risk, as these sectors can be more volatile.
Nifty Midcap 150 Sectoral Composition
| Sector | Weightage |
| Industrial Manufacturing | 25% |
| Consumer Durables | 20% |
| Pharmaceuticals | 18% |
| Financial Services | 15% |
| Others | 22% |
Sectoral Impact Analysis: The Nifty 100’s concentration in stable, high-growth sectors like IT and financial services contributes to its lower volatility. In contrast, the Nifty Midcap 150’s exposure to more cyclical sectors like industrial manufacturing and consumer durables introduces higher risk but also the potential for substantial gains during economic upswings.
5. Expert Opinions and Investment Strategies
Conservative vs. Aggressive Strategies
Nifty 100: Stability and Consistent Returns
That’s what Trivesh D, the COO of TRADEJINI has to say about Nifty 100 being a better investment option for long-term. He informs that the index has had returns from 12% to 15% compared to other traditional risk free assets such as fixed deposits. In addition, he points out that even though it may not hit any record highs soon, conservative investors still find it a safer bet for steady growth due to its consistent performance over time.
Nifty Midcap 150: High Risk, High Reward
Aiyub Yacoobali (Chairman & MD of South Gujarat Shares And Sharebrokers) is fond of Nifty Midcap 150 given its more higher return possibilities. He observes that even though the mid-cap index has been plying vanquishing PE ratios, it has always performed better in providing significant gains during market surges. However, Yacoobali warns that this list belongs only to those investors who are capable enough and do not mind waiting through a high-risk environment since they should expect some disturbances along the way.
Balanced Portfolio Approach
Jasani, who is HDFC Securities’ head of retail research, is all for index investing in moderation. He recommends putting money into both indices as per the investor’s risk-taking ability. While Nifty 100 creates a stable portfolio, according to Jasani, Nifty Midcap 150 can produce alpha when the market is booming. To a moderate risk investor, he would advise investing 40% in Nifty 150 and 60% in Nifty midcap since it does better during rising market periods.
Market Sentiments and Future Outlook
CEO of Bigul, Atul Parakh, endorses a diversified investment strategy. He suggests that the positive economic indicators and sustained investor confidence are likely to push market performance to new heights in 2024. The Nifty Midcap 150 investment option is alluring for long-term growth focused investors who can tolerate fluctuations. Nevertheless, Parakh points out that including Nifty 100 in a portfolio is crucial if one wants to make sure they’re stable during the bear markets.
6. Comparative Analysis of Financials
Balance Sheets
It is clear by comparing the balance sheets of the Nifty Midcap 150 and Nifty 100 companies that larger-cap firms often have better financials, with lower debt-to-equity ratios, bigger reserves, and better liquidity.
Key Balance Sheet Metrics
| Metric | Nifty 100 Companies | Nifty Midcap 150 Companies |
| Average Debt-to-Equity Ratio | 0.5:1 | 1:1 |
| Average Reserves | ₹10,000 Cr | ₹2,500 Cr |
| Average Liquidity | High | Moderate |
Analysis: As a result of Nifty 100 firms having healthier financials, they are stable and less influenced by economic downturns. In comparison, increased debt levels for midcap enterprises can worsen dangers in times of economic difficulty.
Profit & Loss Accounts
Another very vital consideration is profitability. This is because large-cap companies tend to have better established business models and steady cash flows, which translates into consistent profits. In contrast, midcap companies that have more potential for growth tend to have greater variations in their earnings.
Profitability Metrics
| Metric | Nifty 100 Companies | Nifty Midcap 150 Companies |
| Average Net Profit Margin | 15% | 10% |
| Average Earnings Growth | 8% | 15% |
| Average Return on Equity (ROE) | 18% | 12% |
Analysis:Higher net profit margins and return on equity (ROE) of Nifty 100 indicates more advanced and skillful processes in these large companies. In contrast, greater earnings growth of Nifty midcap 150 suggest a high room for return but also carry more risks because of inconsistency in earnings.
Cash Flow Statements
Concerning cash flow, cash-strapped large caps have strong cash flow indicative of them while mid-caps sometimes find themselves in trouble regarding liquidity.
Cash Flow Metrics
| Metric | Nifty 100 Companies | Nifty Midcap 150 Companies |
| Average Operating Cash Flow | ₹5,000 Cr | ₹1,200 Cr |
| Average Free Cash Flow | ₹2,500 Cr | ₹500 Cr |
| Average Capital Expenditure (CapEx) | ₹1,000 Cr | ₹400 Cr |
Analysis: Their capacity to pay dividends, repurchase shares and invest in new growth opportunities is facilitated by the superior cash flows of Nifty 100 companies. Midcap companies, on the other hand, have less financial flexibility and are thus more prone to cash flow problems in times of economic distress.
7. Peer Comparison and Market Positioning
Nifty 100 vs. Other Large-Cap Indices
In comparison with various large-cap movements like Nifty 50 and BSE Sensex, Nifty 100 had a wider reach amongst premium firms in India. For this reason, not only does it feature the first 50 biggest companies but also their following counterparts who are still among the biggest firms; thus offering a greater degree of diversification in large caps.
Nifty Midcap 150 vs. Other Midcap Indices
This is because the Nifty Midcap 150 has more constituent companies than any other midcap indices, such as BSE Midcap, making it stand out. As a result, its range is bigger hence better diversification; however, at the same time this broader exposure may increase volatility.
Market Positioning Metrics
| Metric | Nifty 100 | Nifty Midcap 150 | BSE Sensex | BSE Midcap |
| Number of Constituents | 100 | 150 | 30 | 100 |
| Average Market Cap | ₹1,00,000 Cr | ₹20,000 Cr | ₹1,50,000 Cr | ₹15,000 Cr |
| Average Annual Returns (5 years) | 12% | 15% | 10% | 14% |
Analysis: Compared to other indexes such as Sensex, Nifty 100 has a wider exposure to large caps and hence a more diversified one. However, BSE Midcap still remains a terrible place to find true mid-cap diversity due to its high volatility levels despite the fact that Nifty Midcap 150 with its increased number of constituents provides for a better mid cap diversification.
8. Risk and Reward: A Quantitative Approach
For decisions about investment that require knowledge, it is necessary to comprehend the equilibrium between danger and profit. The following paragraphs discuss different measures used in quantifying both risks arising from any investment made into Nifty 100 or Nifty Midcap150 along with their possible returns.
Risk-Adjusted Returns
An important indicator for assessing how well an investment performs in contrast to its risk is risk-adjusted returns. The Sharpe Ratio is one well-known measure that adjusts investment return with respect to standard deviation, a quantifiable measure of risk.
Sharpe Ratio Comparison
| Index | Average Annual Return (5 Years) | Standard Deviation | Sharpe Ratio |
| Nifty 100 | 12% | 14% | 0.86 |
| Nifty Midcap 150 | 15% | 20% | 0.75 |
Analysis: The Nifty 100, which has a lower standard deviation, offers a higher Sharpe Ratio signifying better risk-adjusted returns. Nifty Midcap 150 on the other hand is characterised by higher absolute returns that are reduced by its greater volatility hence a slightly lower Sharpe Ratio. This implies that although investments in midcaps may give one bigger returns they also involve greater risks as well.
Sortino Ratio
Though it solely takes into account downside volatility (negative returns), the Sortino Ratio is comparable to the Sharpe Ratio and might be a helpful metric for investors who are risk averse.
Sortino Ratio Comparison
| Index | Average Annual Return (5 Years) | Downside Deviation | Sortino Ratio |
| Nifty 100 | 12% | 10% | 1.2 |
| Nifty Midcap 150 | 15% | 15% | 1.0 |
Analysis: The Nifty 100 has a higher Sortino ratio because it generates returns with relatively low downside risk. Therefore, this is more appealing to conservative investors. However, risk-seeking investors may still prefer the Nifty Midcap 150, despite its potential for higher return on equity, because of the higher downside risk that it entails.
Historical Drawdowns
When assessing risk, it’s important to take into account a drawdown, which is the investment’s peak-to-trough fall over a given time period.
Historical Drawdown Comparison
| Index | Maximum Drawdown (Last 10 Years) |
| Nifty 100 | -25% |
| Nifty Midcap 150 | -35% |
Analysis: Compared to the Nifty 100, the Nifty Midcap 150 has suffered from worse drawdowns, demonstrating how riskier mid-cap assets are. For example, for investors who have a low appetite for risks they may choose to invest in Nifty 100 because its drawdowns are relatively smaller. However, if one is looking for higher returns, he or she would have no qualm in accepting theMore volatility of Nifty Midcap 150.
9. Case Studies: Investor Profiles and Outcomes
Based on historical data, let’s examine three hypothetical investor profiles and their corresponding outcomes to offer some practical insights into how these indices perform in various market scenarios.
Conservative Investor Case Study
Profile: Someone who feels uncomfortable risking money, preferring to choose peace of mind and constant money inflow.
Investment Strategy: The portfolio was divided into pieces where $80% goes for Nifty 100 and remaining $20% goes for Nifty Midcap 150.
Outcome: This portfolio has been producing an average annual return as much as 12%, with rather low levels of variability in the last five years. During periods of market decline, it was possible to rely on the solidity of Nifty 100 that resulted in minimal losses and smoother slopes in growth.
Key Takeaway: Nifty 100 offers basic stability while Nifty Midcap 150 provides some slight room for growth at a lower risk for those investors who are cautious.
Aggressive Investor Case Study
Profile: A daring investor with a great deal of risk appetite looking for the biggest possible growth of funds.
Investment Strategy: 70% in Nifty Midcap 150 and 30% in Nifty 100.
Outcome: Over five years going to four year span this portfolio has yielded an average annualised return of 16%, thus significantly outperforming conservative approach. Conversely, it has also displayed more erratic behaviour or higher volatilities, particularly during correction periods in stock markets.
Key Takeaway: For aggressive investors who are ready to go through more fluctuations and temporary loss Nifty Midcap 150 could be a good choice that will lead to faster growth over a long time period.
Balanced Investor Case Study
Profile: An investor who has a balanced investment portfolio and moderate risk tolerance, seeking for both stability and growth.
Investment Strategy: The portfolio should be split equally in such a way that Nifty 100 would take 50% while Nifty Midcap would take 150%.
Outcome: The balanced portfolio obtained an annual average return of 14% over the last five years, with moderate volatility. This strategy took advantage of the stability provided by Nifty 100 and growth prospects attached to Nifty Midcap 150, resulting in well-rounded performance during different market conditions.
Key Takeaway: A balanced approach that integrates both indices helps invest in a growth oriented manner while ensuring safety from turbulent markets.
10. Nifty 100 vs Nifty Midcap 150: Selecting an Appropriate Index for Your Portfolio
Ultimately, the Nifty 100 or Nifty Midcap 150 choice will rely on an investor’s tolerance to risk, length of investment and goals. Here’s how you can align your investing scheme with your financial personal objectives:
Matching Indices to Financial Goals
Nifty 100:
- Ideal For: Conservative investors, retirees, and those seeking steady, reliable returns.
- Investment Horizon: Medium to long-term (5-10 years).
- Goals: Capital preservation, steady income through dividends, and moderate growth.
Nifty Midcap 150:
- Ideal For: Aggressive investors, younger investors, and those seeking high growth potential.
- Investment Horizon: Long-term (10+ years).
- Goals: Capital appreciation, taking advantage of market upswings, and leveraging high-growth sectors.
The Role of Economic Cycles
Understanding the economic cycle is critical when choosing between the Nifty 100 and Nifty Midcap 150:
- Bull Markets: The Nifty Midcap 150 tends to outperform during bull markets due to its exposure to high-growth sectors and companies in expansion phases.
- Bear Markets: The Nifty 100 generally performs better during bear markets, thanks to its stability and the financial strength of large-cap companies.
Final Recommendations
For Conservative Investors:
- Allocate a larger portion of your portfolio (70-80%) to the Nifty 100 to ensure stability and lower volatility.
- Consider a small allocation (20-30%) to the Nifty Midcap 150 to capture some growth potential without significantly increasing risk.
For Aggressive Investors:
- Tilt your portfolio towards the Nifty Midcap 150 (60-70%) to maximize growth potential, especially if you have a long-term horizon.
- Retain a smaller allocation (30-40%) in the Nifty 100 to provide a safety net during market downturns.
For Balanced Investors:
- An equal allocation (50-50) between the Nifty 100 and Nifty Midcap 150 can provide a balanced approach, offering both stability and growth.
- Regularly rebalance your portfolio to maintain this allocation, particularly after significant market movements.
Investment Tips:
- Systematic Investment Plan (SIP): Consider investing via SIPs to mitigate the impact of market volatility and benefit from rupee cost averaging.
- Annual Review: Regularly review and adjust your portfolio to align with your evolving financial goals and market conditions.
Conclusion
Choosing between the Nifty 100 and the Nifty Midcap 150 is not a straightforward decision—it depends on your individual risk tolerance, financial goals, and investment horizon. Both indices have their unique strengths: the Nifty 100 offers stability and consistent returns, making it ideal for conservative investors, while the Nifty Midcap 150 presents higher growth potential, suitable for those with a higher risk appetite.
Most investors would rather have all their eggs in both baskets; this is because of the stability and volatility that they are likely to encounter in various market situations. If you want to achieve sustainable income, capital growth or a combination of both, familiarising yourself with these indexes will help you create an invincible and rewarding investment profile.
