BAJAJ FINSERV ASSET MANAGEMENT LIMITED.
The Nifty MidSmallcap 400 Index tracks the performance of mid cap and small cap companies listed on the National Stock Exchange of India. It reflects the aggregate movement of share prices of these companies based on their free float market capitalisation.
Index constituents operate in expanding industries and may be in earlier stages of business development compared to large cap firms.
The index includes a diversified basket of mid cap and small cap companies, reducing concentration risk.
Many constituents operate in growing sectors such as manufacturing, speciality chemicals, technology services, and niche consumer segments.
Investments in mid cap and small cap companies offer the potential to build wealth in the long term.
According to SEBI norms, mid cap companies are those ranked between 101 and 250 on the stock exchange based on full market capitalisation, and small cap companies are ranked 251 and below. The Nifty MidSmallcap 400 Index represents the performance of 150 mid cap companies and 250 small cap companies.
The index is calculated using the free-float market capitalisation method, which considers only shares available for public trading and excludes promoter holdings and other locked in shares. The index level represents the aggregate market value of these tradable shares relative to a base period.
The Nifty MidSmallcap 400 index includes mid and small-sized companies based on market cap. On the other hand, the Nifty LargeMidcap 250 index covers the large cap and mid cap segments of the market. It combines 100 large cap stocks from the Nifty 100 with 150 mid cap stocks from the Nifty Midcap 150.So, while both indices combine two market segments, they differ in their risk-return profile.The Nifty MidSmallcap 400 typically carries higher risk because it covers mid and small cap companies, which are generally more volatile and sensitive to fluctuations in market conditions but may experience stronger growth during favourable conditions.In comparison, the Nifty LargeMidcap 250 combines the higher volatility of mid caps with the relative stability of large caps, creating a more balanced risk profile. However, large cap stocks may not offer the scope of expansion that smaller companies do.Investors looking for diversified exposure with reduced risk may consider investing in funds linked to the Nifty LargeMidcap 250. Bajaj Finserv AMC offers the Bajaj Finserv Large and Midcap Fund, a mutual fund scheme benchmarked against Nifty LargeMidcap 250 TRI. The fund has a MOAT investing strategy, focusing on quality companies with durable competitive advantages and long-term growth potential. To read more about the scheme and for statutory information, click here.
The Nifty MidSmallcap 400 includes mid- and small-cap companies, whereas the Nifty LargeMidcap 250 covers large- and mid-cap stocks.
The Nifty MidSmallcap 400 generally reflects relatively higher volatility due to small-cap exposure, while the Nifty LargeMidcap 250 combines mid-cap growth potential with the relative stability of large caps.
The Nifty MidSmallcap 400 may experience sharper growth during favourable market phases, whereas the Nifty LargeMidcap 250 typically offers more balanced participation across market cycles.
Moat investing
The fund follows a moat investing strategy, focusing on companies that have strong economic moats; i.e. sustainable competitive advantages over their peers.
Long term view
Economic moats have the potential to help these companies defend their market share over an extended period. Fund managers select companies based on these fundamental attributes rather than short-term market trends.
Balanced portfolio
The fund blends the relative stability of large caps with the comparatively higher long-term growth potential of mid caps.
Diversification
The professionally managed portfolio provides exposure to a diversified set of large and mid cap growth opportunities without the need to pick individual stocks.
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The Nifty MidSmallcap 400 Index is designed to represent the performance of mid cap and small cap companies in the Indian equity market. It combines all companies that are part of the Nifty Midcap 150 Index and the Nifty Smallcap 250 Index, providing broad coverage of this segment.
Due to its wide coverage, the index is commonly used as a benchmark for evaluating portfolios focused on mid cap and small cap equities. It may also serve as a benchmark for index funds, exchange traded funds (ETFs), and other market-linked products.
Companies are weighted according to their free float-market capitalisation. The index is reviewed periodically to reflect changes in market capitalisation, liquidity, and constituent eligibility.
The index includes companies from multiple sectors such as financial services, manufacturing, healthcare, information technology, consumer goods, and capital goods. Constituents may change over time due to periodic reviews.
The selection of stocks follows a structured methodology to ensure liquidity, investability, and market representation.
The index is formed by combining all companies that are part of the Nifty Midcap 150 Index and the Nifty Smallcap 250 Index, resulting in a total of 400 stocks representing mid sized and small sized companies.
Only companies with sufficient free-float (shares available for public trading) are considered. Weightage in the index is assigned using the free-float market capitalisation method.
Stocks must meet minimum liquidity requirements, such as average daily trading volume and turnover thresholds, to ensure ease of trading.
Companies must have a minimum listing track record on the NSE, unless they are newly listed and meet fast-track eligibility norms.
The index is reviewed semi-annually. During this process, eligible companies may be added or removed based on updated market capitalisation rankings and liquidity conditions.
Any addition or removal of a stock from either the Nifty Midcap 150 or the Nifty Smallcap 250 is reflected in the Nifty MidSmallcap 400 Index, keeping it aligned with its underlying indices.
Because the index relies on established methodologies, its construction remains rules based and transparent.
As of April 2026, the index comprises companies from financial services, healthcare, consumer services, information technology, capital goods and much more. The financial services sector accounts for the highest share. Sector weights vary over time due to price changes, constituent updates, and periodic reviews. No sector allocation should be assumed to remain constant or predictive of future performance.
The Nifty MidSmallcap 400 Index is not directly investable. Investors cannot purchase the index itself, and there are currently no index funds or ETFs designed to replicate it.
To gain exposure similar to the index, an investor would need to buy the individual constituent stocks in their respective weights. However, replicating all 400 stocks may be complex, capital-intensive, and difficult to maintain due to periodic rebalancing.
As a result, investors typically use the index as a benchmark or market indicator rather than as a direct investment avenue.
It measures the performance of mid cap and small cap companies using the free float market capitalisation method, considering only tradable shares and expressing their combined market value relative to a base period.
The Nifty Midcap 150 includes only mid cap stocks, whereas the Nifty MidSmallcap 400 combines both mid cap and small cap companies.
The index contains 400 companies drawn from the Nifty Midcap 150 and Nifty Smallcap 250. The constituent list changes during periodic reviews.
No. Investors cannot invest in the index directly. As of now, there are no index funds or ETFs tracking the Nifty MidSmallcap 400. If such products are introduced in the future, investors may access the index through them. Alternatively, exposure can only be created by purchasing the individual stocks that constitute the index, which may be operationally complex and capital-intensive.
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.
