Nifty Midcap150 Momentum 50 Index: How Stocks Are Selected and Rebalanced

The Nifty Midcap150 Momentum 50 Index is a “factor-based” equity index composed of the top 50 mid-cap companies selected from the Nifty Midcap 150 universe. This selection is based on a company's Normalised Momentum Score (NMS) and free-float market capitalisation. The index is rebalanced semi-annually.

The Nifty Midcap150 Momentum 50 Index includes 50 companies selected from the Nifty Midcap 150 Index. The selection is based on a “Normalised Momentum Score (NMS)”. For those unaware, it is a technical indicator used to measure a stock’s relative strength (based on its recent price performance) compared to its peers. (Source: NiftyIndices)

As per general market understanding, the NMS considers a stock's 6-month and 12-month price returns. Besides, it also adjusts these returns for price volatility. 

Once the 50 stocks are selected, each stock is assigned a “weight” in the index based on the following two factors: 

1. Normalised Momentum Score (NMS)

and 

2. Free-float market capitalisation (the market value of shares available for public trading)

Consequently, companies with stronger momentum and a larger free-float market value receive a higher allocation in the index. Want to have a detailed understanding? Read this article to first learn what a Nifty Midcap 150 momentum 50 index​ is, how NMS works, and then check how stocks are picked + rebalanced by the index. 

The Nifty Midcap150 Momentum 50 Index tracks the performance of 50 companies selected from the Nifty Midcap 150 Index. These companies are chosen based on their NMS, which is calculated using a stock's 6-month and 12-month price returns. 

Besides, NMS also considers “price volatility” and may give preference to stocks that have shown relatively more stable price trends instead of sharp and inconsistent movements. 

After the 50 companies are selected, each stock is assigned a weight based on its NMS and its free-float market capitalisation. As a result, companies with stronger momentum and larger publicly traded market value receive a higher weight in the index. 

For more clarity, let’s check out some of its primary features:

(Source: Nifty Indices - Factsheet of Nifty Midcap 150 Momentum 50 Index)

Note: The Nifty Midcap150 Momentum 50 Index is permitted to be used by Asset Management Companies (AMCs) to develop index funds, exchange-traded funds (ETFs), and other investment products that aim to replicate the index. 

The NMS is a technical indicator widely used to distinguish stocks with “sustained upward trends” from those that have recorded high returns through sharp price swings. 

Its calculation starts by measuring a stock's 6-month and 12-month price returns. Next, these returns are adjusted for the stock's volatility. As per general industry practice, a stock that generates high returns but exhibits relatively higher volatility (price fluctuations) may receive a lower score than a stock delivering similar returns with relatively lower volatility.

After this adjustment, the score is “normalised”. Each stock is compared with all other eligible stocks in the universe and assigned a percentile score. A stock with an NMS of 100 ranks among the better performers, while a score closer to 1 indicates relatively weak recent price performance. 

As mentioned earlier, stock weights in the Nifty Midcap150 Momentum 50 Index are determined using a combination of the NMS and the company's free-float market capitalisation. 

Based on this methodology, eligible companies from the Nifty Midcap 150 Index are assigned weights. The top 50 companies with the highest weights are then selected for inclusion in the Nifty Midcap150 Momentum 50 Index. To understand better, let’s study an example. 

Hypothetical Example

Suppose an NMS score is calculated for all 150 companies tracked by the Nifty Midcap 150 Index. Post-considering the free-float market capitalisation of each company, all the stocks are ranked based on their final weights as follows:

In this example, Company AB secures the 50th position and becomes the last company to be included in the Nifty Midcap150 Momentum 50 Index. It is worth mentioning that the index is reviewed and rebalanced twice a year. During each stock rebalancing review, the NMS and free-float market capitalisation of all 150 eligible companies are recalculated. 

If Company AC improves its ranking to 48th in the next review, it will enter the index. At the same time, a company that falls below the 50th rank will exit the index.

So, now you know what the Nifty Midcap150 Momentum 50 Index is, how it selects stocks, and how it rebalances them through its semi-annual review. If we were to revise, the index is composed of the top 50 companies selected from the Nifty Midcap 150 Index based on the highest weights assigned using a combination of the NMS and free-float market capitalisation. 

The index is reviewed + rebalanced twice a year, allowing new companies with better momentum characteristics to enter while companies whose rankings decline may exit. As a result, potentially, the index may remain aligned with the latest momentum trends within India's mid-cap market.

For more information, you can visit ww.tatamutualfund.com/deshkarenivesh. 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. For assistance, you can also call (022) 6282 7777 from Monday to Saturday, 9:00 AM to 5:30 PM, or email service@tataamc.com

1. What is momentum investing, and why has it become popular in India?

Momentum investing is a strategy that invests in stocks with strong recent price performance, based on the expectation that the trend may continue for some time. 

As per the latest Research Paper (Series 2, May 2026), published on Nifty Indices, from April 2005 to February 27, 2026, the momentum indices have delivered an annualised return of 23%, compared with 17.24% for the Nifty Midcap 150. 

As of February 2026, 24 passive funds tracking Nifty Momentum indices managed over ₹17,000 crore in assets, which potentially shows growing investor interest. (Source: Research Paper Series 2, May 2026, NiftyIndices)

2. Why does the Nifty Midcap150 Momentum 50 Index rebalance only twice a year?

As per general market understanding, “semi-annual rebalancing” may potentially maintain a better balance between:

• Capturing new momentum opportunities 

and

• Limiting unnecessary portfolio changes

Studies have shown that quarterly rebalancing results in 20 to 50% higher portfolio turnover, while delivering only marginal performance improvement over shorter periods. (Source: Research Paper Series 2, May 2026, NiftyIndices). As a result, semi-annual reviews may potentially be a better and cost-efficient approach.

3. Does a high Normalised Momentum Score (NMS) guarantee better future returns?

No, the NMS is based on a stock's historical price performance after adjusting for volatility. Potentially, it may help in identifying stocks with strong recent momentum, but it cannot predict future returns. Market conditions can change, and even stocks with high momentum may underperform in the future.