Nifty Midcap Select

Nifty Midcap Select 

The Nifty Midcap Select Index is a broad-based index on the National Stock Exchange (NSE) that tracks the performance of 25 liquid firms from the Nifty Midcap 150 index. The index includes stocks based on their market capitalisation, average daily turnover, and the availability of derivative contracts. The index was released on September 14, 2021, with a base date of October 3, 2005, and a base value of 1000.  

The Midcap Nifty Select index is owned and maintained by NSE Indices Limited, formerly India Index Services & Products Limited. The Midcap index is regulated by a three-tier organisation that includes the NSE Indices Board of Directors, the Index Advisory Committee, and the Index Maintenance Subcommittee.

Calculation of Nifty Midcap Select Index Value

The Nifty Midcap Select weightage value is calculated by weighting its 25 stocks based on free-float market capitalisation compared to a base market capitalisation value in real time. The formula is:

Index Value = (Current Index Free Float Market Capitalisation / Base Free Float Market Capitalisation of Index) * Base Index Value 

Where, 

• Index Free Float Market Capitalisation = Current shares outstanding * IWF * Capping factor * Price
• [IWF = Investable Weight Factor i.e. the portion of the outstanding shares that is open to trading for the public on the exchange
• Capping factor = 1 in case of uncapped indices] 

The Nifty Midcap Select index is evaluated semi-annually in January and July of each year, using six months' worth of data. The replacement of stocks begins on the final trading day of March and September. Additional reconstitution may be required if the stock is no longer accessible for F&O trading or if any corporate actions are taken.

Nifty Midcap Select Index Scrip Selection Criteria

To be included in the Nifty Midcap Select index, companies must meet the following selection criteria: 

• Stocks must be included in the Nifty Midcap 150 index and traded as derivatives on the NSE F&O segment.
• New securities from the 'Reranked Universe' will be included if their 6-month average float-adjusted market capitalization is at least 1.5 times the index's lowest constituent.
• Securities will be excluded if their rank in the 'Reranked Universe' is less than 30 based on a 6-month average complete market capitalisation.
• If the number of eligible stocks in the 'Reranked Universe' is below 20, up to top 60 stocks can be considered. If required, it may be followed by the top 70 stocks, and so on, based on average market capitalisation and average daily turnover.

Stock Selection Process

Here are the steps involved in the stock selection process of Nifty Midcap Select:

• Step 1: The 'Eligible Universe' will include all Nifty Midcap 150 businesses with active F&O trading. 
• Step 2: From the qualifying universe, the top 5 stocks are chosen based on their 6-month average whole market capitalisation. These five stocks are called the 'Ranked Universe'. 
• Step 3: The remaining stocks in the Nifty Midcap 150 index are re-ranked using their 6-month average full market capitalisation and 6-month average daily turnover.
• Step 4: The top 50 stocks from Step 3 are combined to create a 'Reranked Universe'. Then they are arranged once again according to their 6-month average free-floating market capitalisation.