13% of the Midcap 150 stocks and 8% of the Smallcap 250 stocks have driven roughly 50% of this year’s rally

Mid-cap and small-cap indices have soared in 2024, setting new records and defying skeptics. However, the optimism reflected in these benchmarks might not be as pervasive as it seems.

An ET study reveals that in the Nifty Midcap 150 and Smallcap 250 indices, 20 stocks have driven roughly 50% of this year’s rally. This means just 13% of the Midcap 150 stocks and 8% of the Smallcap 250 stocks have propelled most of the gains in 2024. The Midcap 150 index has surged 21.86%, and the Smallcap 250 index has jumped 21.13%, outperforming the benchmark Nifty, which has risen 8.35% during the same period. All three indices reached record highs on Tuesday, continuing their unprecedented rally.

Money managers express concerns about the narrow contributions to these indices’ gains, signaling discomfort with the extent of the run-up in these stocks.

“The momentum looks strong directionally, but valuations are very high, and any change in sentiment may lead to a fall,” said Phanisekhar Ponangi, chief investment officer at MavenArk Asset Managers.

The primary contributors to the mid-cap and small-cap indices’ gains include PSUs, financial services, infrastructure, and energy companies. Top contributors to the midcap index, which has gained nearly 36,36 points since January, include Hindustan Zinc, Macrotech Developers, JSW Energy, and Cummins India.

In the smallcap index, which has increased by 2,878 points, key contributors include Indian Overseas Bank, Cochin Shipyard, Housing & Urban Development Corporation, Motilal Oswal Financial Services, and Exide Industries, among others.