The Midcap Index may be at record high, but it has seen better years than 2023

Here's how the index has performed in the last month of previous years—

"Our confidence lies in the ongoing journey of mid and small-caps, anticipating their performance to potentially outshine broader indices. This is not to say that we underestimate the broader markets; we also foresee promising returns from these areas," said Anirudh Garg, Partner and Head of Research at Invasset PMS.

Garg added that specific sectors such as defence, railways, PSUs, PSU banks, and capital goods are poised to benefit significantly from this 'old economy run'. "Our investment philosophy is geared towards uncovering value, which we believe is more prevalent in mid and small-cap segments, aligning with our broader economic outlook"

"What’s crucial is that it has sustained the gap with support from all the sectors. Taking a cue from the political developments and the market reaction in 2019, the market will witness upward momentum until the run-up to the general elections of 2024," said Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy.

Earlier in September, domestic brokerage firm Kotak Institutional Equities dropped its recommended mid-cap portfolio as it could not find too many stocks beyond the BFSI space that offer decent potential upside to its 12-month fair value.

Explaining further, Kotak said that valuations of stocks in their favourite capital goods, healthcare, QSR and real estate sectors discount growth for the next few years and leave absolutely no room for any disappointment.

“We would have had to remove these stocks from the portfolio anyway, as it would be incorrect to recommend stocks with low conviction and potential downside to our fair values, which would have left a portfolio comprising BFSI stocks largely,” the brokerage said.

Since Kotak suspended its coverage, the Nifty Midcap index has gained 8% while the Nifty Smallcap index has risen 14% from September 12, 2023 close.

On a weekly time frame, the Nifty Midcap had formed a Flag and pole pattern. Usually, the flag and pole are a continuous pattern. In current formation, the index has formed a bullish price action indicating participants been bullish expecting the index to move higher, said Virat Kirti Jagad, Technical Research Analyst at Bonanza Portfolio.

"On the EMA front, the prices are trading above major EMA’s, which indicates a positive trend. The Slow EMA (100) is following the trend and trending upward, which indicates a positive trend. On the momentum indicator RSI, bulls manage to trade in the overbought zone shows that bulls have complete control over the index," Jagad said.

While on a monthly chart, the Nifty Midcap Index is classically moving in a well-channelised manner. "The price has been moving higher high and higher low formation Index has given a breakout of the Pennant Pattern on the upside. On the EMA front, the prices are trading above three EMA’s (21, 50, 100) price trading above all the three EMA which indicates bullishness in the Index. On the momentum indicator MACD, the MACD line has crossed the signal line and moving in the north direction confirms the positivity in the Midcap Index."

Considering all these factors, the analyst said that the Midcap Index is set to continue its upward trend with the immediate support at 9200. If bulls remain in charge then we might see further upside till the 11367 mark, he noted.

*As of December 4 Each Year