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The NIFTY Midcap 150 Index is made up of 150 medium-sized companies from the stock market based on full market capitalization. These midcap companies can belong to different sectors like banking, IT, pharma, auto, consumer goods, and more.
Now, as an investor, you cannot directly “buy” the index. But what you can buy instead is an “index fund”.
A NIFTY Midcap 150 index fund invests in the same 150 companies that are part of the NIFTY Midcap 150 Index. Its fund manager does not actively pick and choose stocks. Instead, they invest in the same proportion (weightage) as the index.
In this way, by investing in a NIFTY Midcap 150 index fund, you can indirectly invest in all 150 companies that form part of the index.
Want to learn more? In this article, we will first understand how the weights of companies are decided in the NIFTY Midcap 150 index fund and what free-float market capitalization means. Then, we will understand the Tata Nifty Midcap 150 Index Fund in detail and learn the simple steps to invest in it.
Table of Content
How is the Weight of Each Company Decided in the Nifty Midcap 150 Index?
To decide which companies go into this index, NSE looks at the “NIFTY 500 Index”. The NIFTY 500 covers the 500 largest companies in India by market size. The top 100 companies (the biggest ones) form the NIFTY 100 Index. The next set, ranked 101 to 250 by size, forms the NIFTY Midcap 150 Index.
However, once the 150 companies are chosen, the weight of each company inside the index is not based on the full market captalisation. Instead, it is based on “free-float market capitalisation”. Let’s understand in detail:
What is Free-Float Market Capitalisation and its Role in Deciding Weightage?
Free-float market cap means the value of shares that are actually available for trading in the market. It excludes shares held by promoters and the government.
Be aware that this number is used to decide how much weight the company gets in the index. As a result, in the NIFTY Midcap 150 Index:
For more clarity, let’s study an example. Say there are only two companies included in the NIFTY Midcap 150 Index with the following details:
| Particulars | Company A | Company B |
| A) Share Price | ₹100 | ₹200 |
| B) Total Shares | 10 lakhs | 5 lakh |
| C) Promoter Holding | 40% | 20% |
| D) Free-float Holding [B x (100- C)] | 6 lakhs [10 lakhs x (100-40%)] | 4 lakhs [5 lakhs x (100-20%)] |
| E) Free-float Market Capitalisation [A x D] | ₹6 crore | ₹8 crore |
You can observe that the free-float market capitalisation of both companies is different. Now, the index will assign a weight based on it. Firstly, the total free-float will be calculated as follows:
| Weight of Company A | Weight of Company B |
| ₹6 crore/ ₹14 crore = 42.9% | ₹8 crore/ ₹14 crore = 57.1% |
Since Company B has a larger free-float market cap, changes in its share price will have more impact on the performance of the index fund.
What is the Tata Nifty Midcap 150 Index Fund?
The Tata Nifty Midcap 150 index fund is an open-ended fund replicating/tracking the Nifty Midcap 150 Index. This fund invests in the same 150 mid-sized companies in similar proportions/weights as the index subject to tracking error.
150 Midcap Companies, One Index Fund: A Look at Tata Nifty Midcap 150 Index Fund
For a better understanding, let’s check out some key features of the Tata Nifty Midcap 150 index fund:
| Feature | Explanation |
| Risk Level |
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| Constituents Selection |
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| Weighting Methodology |
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| Rebalancing Frequency |
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| Midcap Exposure |
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| Sector Diversification |
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| Minimum Investment |
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Tata Nifty Midcap 150 Index Fund is Available in 4 Options
This Nifty Mid Cap Index Fund is available in four different options:
Tata Nifty Midcap 150 index fund (An open-ended fund replicating/tracking the Nifty Midcap 150 Index (TRI))
How to invest in the NIFTY Midcap 150 Index Fund?
When you invest in the Tata Nifty Midcap 150 index fund, you are allotted units. The value of each unit is called the NAV (Net Asset Value), which is declared at the end of each trading day.
You can invest through a lump sum or SIP (Systematic Investment Plan), without even needing a demat account. Let’s see how:
Conclusion
The NIFTY Midcap 150 Index represents 150 medium-sized companies in India. These are ranked 101 to 250 by size from the NIFTY 500 list. However, the NIFTY Midcap 150 Index is just a calculation showing how a group of 150 mid-sized companies is performing. It is not a security you can purchase.
To actually invest, you need a financial product that mimics the index. That is where “index funds” come in. The Tata Nifty Midcap 150 index fund invests in these 150 mid-cap companies in the same proportion as the index. This can offer you diversification across sectors and exposure to India’s midcap growth potential.
For more information, you can visit www.tatamutualfund.com. The Investor Service Centre of Tata Asset Management Pvt. Ltd. is located at Mulla House, Ground Floor, 51, M.G. Road, Near Flora Fountain, Mumbai – 400 001, Maharashtra. The office hours are Monday to Friday, 9:00 AM to 5:30 PM, and Monday to Saturday, 9:00 AM to 5:30 PM. For assistance, you can also call (022) 6282 7777 or email service@tataamc.com.
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Disclaimer: The views mentioned above are for information & educational purposes only and do not construe to be any investment, legal or taxation advice. Investors must do their own research before investing. The views expressed in this article are personal in nature and in is no way trying to predict the markets or to time them. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action taken by you. Please consult your Mutual Fund Distributor before investing. The views expressed in this article may not reflect in the scheme portfolios of Tata Mutual Fund. There are no guaranteed or assured returns under any of the scheme of Tata mutual Fund.
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
