Stock Market in August: Midcap Index outperforms Nifty50, trades at PE multiple of 23x - what should investors know

The Nifty Midcap 100 in August 2022 outperformed the benchmark index Nifty50 by over 6 per cent month-on-month (MoM). The Nifty50 index surged by 3.5 per cent MoM in the previous month.

In P/E terms, the Nifty Midcap 100 now trades at an 18 per cent premium to large-caps at 23.2x, whereas the Nifty Small-cap 100 trades at a 12 per cent discount to large-caps at 17.2x, the domestic brokerage firm Motilal Oswal said in its monthly report.

The brokerage said that the midcaps during the last 12 months have risen by 11 per cent, while smallcaps have declined 6 per cent. Besides, both the broader market indices have underperformed the benchmarks by 7%/55%, respectively during the last five years.

The best midcap performers in August 2022 were Tata Chemicals up over 24 per cent, Indraprastha Gas up over 21 per cent, Varun Beverages up over 17 per cent, Escorts Kubota up over 15 per cent, and Tata Communication up over 15 per cent.

On the contrary, Balkrishna Industries declined by over 11 per cent, followed by Coforge and Ipca Labs each down by 10 per cent, while Alkem Lab, Alembic Pharma, Trident each slipped by 7 per cent from the broader markets in the previous month.

The market analyst and TradeSwift Director Sandeep Jain said, “Broader markets are expected to show a surge, however, benchmark index Nifty50 is likely to be in range-bound.” As per Jain, sectoral churning along with stocks, stock-specific actions to aid the overall market going forward.

The Midcap Index gained for 12th straight week, up by over 2 per cent. Astral, Concor, Firstsource, PNB, Dixon, and Ambuja were among the top Midcap gainers last week, while Rain Industries, IndiGo, Escorts, Syngene, PI Industries were among the top Midcap losers.