Mid-Caps outperform sensex for the third consecutive year

For the third consecutive year, the mid-cap stocks in India overshadowed the benchmark S&P BSE Sensex Index as the outperforming earnings and high domestic inflows subsided the fears over Brexit, Donald Trump's policies and demonetisation.


The index increased by 33 percent in the year ended March 2017, generating twice the returns as compared to the Sensex, marking the longest stretch of escalating S&P BSE Midcap Index since 2005.

While on an average, the returns from the 30 Sensex constituents increased at less than half in comparison with mid-cap index stocks' growth to 13.4 percent.

The foreign investors own 27.3 per cent stakes in Sensex, while they hold 19.43 per cent of the mid-cap index. Over a period of three years, the foreign ownership in the Sensex stocks has increased by over three per cent points, although, there has been a rise of half a per cent point in their holding in mid-cap index.

Further, mid-cap index is trading at a 37 per cent premium to the Sensex, and is also at a 19 per cent premium to its five-year average price-to-earnings ratio.

Whereas the demand for initial public offerings has also been at its highest since the last 11 years, the investors in mid caps are expected to book profits.