HAVE YOU PAID ATTENTION TO THE MICROCAP 250 INDEX?

Better yet, the question should really be, Have you heard of the Microcap 250 index? I am sure many are not even aware- perhaps because the Nse has launched so, so many indices that it has become difficult to keep track. And also perhaps because the general trend has been so comfortably bullish that there really hasn’t been necessity to track it so widely for picks or finding outperformers.

But with the market in a reaction over the last quarter of 2024, that may be spilling over ahead as well, especially in the light of low expectations for Q3 and perhaps even Q4 results of FY 24-25, time may be at hand for casting our net wider to find performers to invest into in coming months.

The Microcap250 index includes the top 250 companies beyond the Nifty 500 index constituents, selected based on their average full market capitalization. It was launched in 2021 with a base date back in 2005, with a base value of 1000. It is currently at 25160 (Dec 24,2024). It is rebalanced twice a year. It draws members from a large number of sectors with Cap Goods and Pharma having the most weightage.

What is quite interesting about this index is its sustained outperformance. The attached chart gives us a clear idea of outperformance. Here, we have compared it with the Nifty, the Nifty500 and NiftyMidcap150. The results are very evident- the Microcap250 has consistently outperformed all the other indices! The chart shown is for a 3-month window but even longer period, the outperformance is persistent.

So, it may be time to start focusing on stocks from the Microcap 250 for stock picks. In Neotrader we have already included this as a universe of stocks for the benefit of our members.

In the last week, for eg, the Microcap index improved 4.26% against a gain of 2.3% for the Smallcap and 2.07% for the Midcap index.

For those that like playing momentum and little higher risk game, stocks from this index could be good bets for producing some alpha to your portfolio.