Mid Cap Stocks in India

What are mid cap stocks?

Mid cap stocks are companies in the middle of the market by size. Under SEBI's classification for mutual funds, they are the 101st to 250th largest listed companies by full market capitalisation (market cap is the share price multiplied by the number of shares). AMFI updates the list every six months.

Mid caps are often companies that have moved past the start-up stage and proved their business model, but still have plenty of room to grow - some become the large caps of the future. Others are established companies in smaller or niche industries.

Why investors look at mid cap stocks

Growth potential

Smaller companies can grow revenue and profit faster than giants that already dominate their markets.

Room to be discovered

Mid caps are covered by fewer analysts than large caps, so businesses that are improving can be overlooked for a while.

Balance of risk and reward

Mid caps usually sit between large caps and small caps on both potential return and risk.

What to keep in mind

Mid cap stocks are more volatile than large caps. In market corrections they often fall further and faster, and it can take longer for them to recover. Their liquidity - how easily you can buy and sell without moving the price - is lower than for large caps, though generally much better than for small caps.

Before investing in a mid cap company, look closely at its balance sheet (especially debt), whether its growth is turning into cash flow, the quality and track record of its management, and its valuation compared with its growth. Diversifying across several companies reduces the impact of any one going wrong. Mid cap mutual funds, which SEBI requires to invest at least 65% in mid cap stocks, are another way in.

How to invest in mid cap stocks

1. 1

   Open a demat and trading account

   A demat account holds your shares electronically; a trading account lets you buy and sell them. With GoPocket you can open both online in a few minutes with your PAN, Aadhaar and bank details.

2. 2

   Add money

   Transfer funds to your trading account by UPI or net banking.

3. 3

   Research the company

   Pick a company from the list above and open its page to see its share price chart, financial performance and shareholding before you decide. Compare it with other mid cap stocks on business quality, debt, growth and valuation.

4. 4

   Place your order

   Search for the stock in the GoPocket app or web platform, choose the quantity, and place a delivery order to hold the shares in your demat account. A limit order lets you set the most you are willing to pay.

5. 5

   Track and review

   Follow the company's quarterly results and news. Spreading your money across several companies and sectors reduces the damage if one investment goes wrong.

Terms used on this page

LTP

Last traded price - the price at which the stock last changed hands. The figure below it is the change from the previous day's close.

Market cap

Market capitalisation: share price multiplied by the number of shares issued. It measures a company's size in the market and is shown here in rupees crore (1 crore = 1,00,00,000).

Cap band

Whether a company is large, mid, small or micro cap, based on its market capitalisation. Larger companies tend to be less volatile.

Sector and industry

The NSE groups companies into broad sectors (such as Financial Services) and narrower industries within them (such as Banks), based on what they mainly do.

Trading graph

How the share price has moved during the latest trading session, from the 9:15 open to the 3:30 close. The dashed line is the previous day's closing price.