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The Nifty Microcap 250 index is a rules-based benchmark designed to track companies at the lower end of the market capitalisation spectrum among listed equities. The index comprises the top 250 companies that lie beyond the Nifty 500 universe and reflects the performance of a broad microcap basket. Such stocks may behave very differently from large cap and mid cap stocks across market cycles.
Microcaps offer exposure to emerging companies at early stages.
Represents small businesses that may scale operations and revenues over time.
Microcap stocks are associated with higher volatility and liquidity risk.
By including 250 stocks, the index spreads exposure across multiple companies.
The Nifty Microcap 250 is an equity index that captures a diversified set of relatively smaller listed companies ranked below the Nifty 500 by full market capitalisation. It follows a transparent and rules-based methodology, with constituents reviewed periodically to ensure alignment with eligibility criteria. The index is weighted by free-float market capitalisation, meaning companies with higher investible market value have greater representation. Owing to the nature of the underlying companies, the index may exhibit higher volatility and wider return dispersion compared to broader market indices, especially during changing economic conditions.
As per SEBI norms, small cap companies are those ranked 251 and beyond in terms of market capitalisation on recognised stock exchanges. Within this, microcap indices usually comprise companies ranked 501 onwards.
Although microcaps fall within the broader small cap universe, they typically represent the lower end of the size spectrum. These companies may be less widely researched, less liquid, and more volatile than small cap companies at the higher end of the market-cap range.
Compared to microcaps, small caps may be relatively less volatile.
Small cap indices may offer better liquidity than microcap indices.
Offers exposure to companies that are still in their growth stage but are larger than micro caps.
Benchmark reference
Benchmarked against the BSE 250 SmallCap TRI Index, which comprises companies ranked from 251 to 500 on the exchange.
3-in-1 approach
Combines quality, growth, and value, seeking out fundamentally strong companies with long-term growth potential at reasonable valuations.
Active management
Provides exposure to potential long-term growth opportunities in the small cap space while seeking to mitigate risk through forensic research and analysis.
Long-term view
Designed for investors willing to stay invested for the long term and potentially ride out market volatility.
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The Nifty Microcap 250 index represents the market movement of a diversified group of microcap companies listed on the NSE. It is a rules-based equity index created by NSE Indices to track the performance of microcap stocks. These are the 250 stocks that are ranked immediately after the Nifty 500.
The index selects the 250 eligible companies based on average full market capitalisation. Since it is free-float market capitalisation–weighted, companies with relatively higher free-float within the microcap universe carry higher weights in the index.
One cannot invest in an index directly. However, investors can access its constituents either through direct equity investments or through mutual funds investing in companies listed on the index. Here are some potential benefits:
Sector spread: As of March 30, 2026, the index includes companies from sectors such as financial services, capital goods, healthcare, consumer durables, chemicals, and more. The index is reviewed regularly, during which stocks may be added or removed, and sector representation or weightages may change over time.
Please note that the reference to any industry/sector/stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.
Early participation in emerging businesses: Many companies in the microcap universe are at earlier stages of their business lifecycle. An index-based approach allows participation in this segment’s potential long-term growth over time. However, such investments also come with elevated risk and uncertainty.
Investing in microcap stocks has potential associated risks that investors need to account for.
High volatility: The Nifty Microcap 250 index tends to exhibit higher volatility compared to mid cap and small cap indices. Price movements may be sharp during both favourable and unfavourable market phases. Past performance may or may not be sustained in future.
Liquidity challenges: Microcap stocks often trade in lower volumes. Limited liquidity may affect price discovery and may increase tracking error for funds attempting to replicate the index.
Downside risk: Microcap stocks may experience steeper declines during periods of market stress or heightened risk aversion compared to larger companies.
Limited availability of schemes: The index is relatively new, and the number of mutual fund schemes tracking it is currently limited.
As per the Nifty Microcap 250 index factsheet dated March 30, 2026, the Total Return Index has performed as follows:
| QTD | YTD | 1 Years | 5 Years | Since Inception |
| -16.14% | -16.14% | -8.25% | 23.82% | 16.24% |
Source: NSE Indices, official Factsheet for Nifty Microcap 250. Data as on March 30, 2026.
Performance data should always be viewed in context, as microcap returns are cyclical and sensitive to liquidity and market conditions.
Past performance may or may not be sustained in future. It is recommended to check the latest Factsheet on the NSE Indices website for up-to-date information.
Based on NSE Indices data as of March 30, 2026, the following companies constitute the top ten constituents by index weight. Constituents and weights may change over time.
| Company | Weight (%) |
| TD Power Systems Ltd. | 1.47 |
| Ujjivan Small Finance Bank Ltd | 1.44 |
| Sansera Engineering Ltd. | 1.36 |
| South Indian Bank Ltd. | 1.35 |
| Karnataka Bank Ltd. | 1.27 |
| MTAR Technologies Ltd. | 1.12 |
| Astra Microwave Products Ltd. | 1.10 |
| Tamilnad Mercantile Bank Ltd. | 1.04 |
| Edelweiss Financial Services Ltd. | 0.96 |
| Strides Pharma Science Ltd. | 0.94 |
Data as on March 30, 2026; Source: Nifty Microcap 250 Factsheet, NSE.
Please refer to the exchange website for the exhaustive list of Nifty Microcap 250 Companies.
Please note that the reference to any industry/sector/stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.
Exposure to microcaps through direct equity investments or certain mutual funds that invest in companies ranked below 500 on stock exchanges may be considered by:
Investors with long investment horizon: Microcap segments often require extended timeframes for potential outcomes to play out. Shorter horizons may increase the likelihood of exiting during unfavourable market phases.
Aggressive investors: Microcap exposure involves very high volatility and chances of interim declines. Investors should be comfortable with these characteristics.
Investors with an existing diversified core: Microcaps are often evaluated as a smaller allocation within an already diversified equity portfolio rather than as a standalone holding.
Preference for rules-based exposure instead of stock selection: Some investors may prefer index-based exposure instead of researching and monitoring individual microcap stocks.
Microcap exposure may materially influence a portfolio’s risk–return characteristics. Due to higher volatility and liquidity risk, microcaps are commonly evaluated as an allocation decision rather than for short-term positioning.
Portfolio practices include:
Position sizing: Keeping microcap exposure as a relatively smaller portion of the overall equity allocation may help manage downside risk.
Staggering entry: A systematic investment plan approach may help reduce timing risk compared to investing a lump sum at a single point.
Rebalancing discipline: Investors may periodically review allocation drift to ensure alignment with their overall asset allocation and risk tolerance.
The index is constructed from companies ranked beyond the Nifty 500 based on average full market capitalisation, subject to liquidity, trading history and other eligibility filters. The top 250 eligible stocks are selected and weighted by free-float market capitalisation. The index is reviewed and rebalanced semi-annually using a predefined methodology.
The Nifty Microcap 250 Index includes companies that fall in the microcap segment, typically representing stocks ranked immediately after the Nifty 500 in terms of market capitalisation. These are generally smaller listed businesses across a wide range of sectors. Since the index is reviewed periodically, the constituents may change over time based on the index methodology.
The Nifty Microcap 250 Index tracks smaller companies ranked 501 onwards (those following the Nifty 500), placing it at the lower end of the small cap universe. In comparison, Nifty’s mid cap indices include comparatively larger and more established companies with higher market capitalisation. As a result, micro caps may carry relatively higher volatility and liquidity risk than mid cap or small cap indices.
Exposure to the Nifty Microcap 250 index involves the potential for high volatility, sharper drawdowns, and liquidity risk, as many constituents trade in lower volumes.
Exposure is typically obtained through passive products such as index mutual funds that aim to replicate the index.
Investors with a longer investment horizon, a very high tolerance for risk, and a portfolio that is diversified across less volatile segments may consider evaluating exposure to the index, after fully understanding the elevated volatility and liquidity risks associated with microcap stocks.
The calculator alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. This tool is created to explain basic financial / investment related concepts to investors. The tool is created for helping the investor take an informed investment decision and is not an investment process in itself. Bajaj Finserv AMC has tied up with AdvisorKhoj for integrating the calculator to the website. Mutual Fund does not provide guaranteed returns. Also, there is no assurance about the accuracy of the calculator. Past performance may or may not be sustained in future, and the same may not provide a basis for comparison with other investments. Investors are advised to seek professional advice from financial, tax and legal advisor before investing in mutual funds.
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Bajaj Finserv Limited, an unregistered Core Investment Company (CIC) under RBI Regulations 2020, is a part of the renowned Bajaj Group.
One of India’s leading and most diversified financial services institutions, Bajaj Finserv Ltd provides simple financial solutions to crores of people every day through its group companies. Through continuous innovation, it strives to enrich the lives of communities across the length and breadth of the country and make financial security accessible to all.
Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
