IRCTC, Vodafone Idea, Indiabulls Housing among 12 stocks to be added to Nifty Midcap 100

The Index Maintenance Sub-Committee (IMSC) of NSE Indices has decided to replace 12 stocks in the Nifty Midcap 100 and 15 stocks in Nifty Smallcap index.

The rejig will come into effect on June 26.

As per the methodology, the Midcap index includes all companies from Nifty Midcap 50. "Remaining companies are selected based on average daily turnover from Nifty Midcap 150 index."

Aarti Industries, Adani Gas, Ashok Leyland, Dr Lal Path Labs, Gujarat Gas, Indiabulls Housing Finance, IRCTC, L&T Finance Holdings, NIIT Technologies, Polycab India, Trent and Vodafone Idea will be added in the NIFTY Midcap 100 with effect from next Friday.

However, the committee removed Engineers India, Future Consumer, Graphite India, HEG, Indian Bank, Indraprastha Gas, Info Edge, Muthoot Finance, NBCC (India), Sterlite Technologies, Torrent Pharmaceuticals and Varroc Engineering.

In the case of Nifty Smallcap 100, the IMSC decides to include all companies from Nifty Smallcap 50. "Remaining companies are selected based on average daily turnover from the top 150 companies selected based on full market capitalisation from Nifty Smallcap 250 index."

The 15 stocks which will be included in the Nifty Smallcap 100 are Affle India, Birla Corporation, Century Textile & Industries, CSB Bank, Dixon Technologies (India), GMM Pfaudler, Granules India, Graphite India, HEG, Inox Leisure, Mishra Dhatu Nigam, Navin Fluorine International, NBCC (India), Sterlite Technologies and Ujjivan Small Finance Bank.

However, the above-mentioned stocks will replace Arvind Fashions, BSE, CARE Ratings, Chalet Hotels, Chennai Petroleum Corporation, CreditAccess Grameen, DHFL, Dish TV India, Future Lifestyle Fashions, JK Cement, Karnataka Bank, Minda Industries, NIIT Technologies, Suzlon Energy and Venky's India.

In the recent correction and underperformance to Nifty50 since 2018, a lot of stocks either lost significant value or got back to their fame again or remain favourite of investors. The major reason was the quality, where a lot of focus has been since 2018. As a result, many stocks became midcap to smallcap to minicap whereas many other stocks saw the journey form smallcap to midcap to largecap. So in the above list of stocks also, the same trend can be seen.

The Midcap and Smallcap indices had seen a stellar performance in 2016-2017, but from 2018, both indices have been underperforming Nifty50, the leading index of the National Stock Exchange.

"Since 2017-18, there is a perceptible change in the way equity investments are made, that is, there is an inherent focus on quality stocks. Quality companies or stocks are the ones with strong balance sheets, good governance standards, and those having a good market share or market leadership. It is these quality stocks that have done better than the rest of the lot. In recent times, this trend has become stronger, and appreciable price performance is seen mainly in quality stocks," Bhavesh Sanghvi, Chief Executive Officer at Emkay Wealth Management told Moneycontrol.