The Volatility Index and the NIFTY MIDCAP 100
The Indian Stock market and the base indices NSE and BSE have introduced many other indices over time. The sectoral indexes list the stocks in a particular sector based on their performance and market cap. There are a few more indices that the investors vouch upon. One of these indices is the India VIX or commonly known as the Fear Index. Another index is the NIFTY Midcap 100 which lists the 100 top-performing mid-cap companies from different sectors. Read through the article to know more about both these indices.
India VIX is a volatility index that gauges the performance of the market and based on certain computations predicts the volatility of the market for the next 30 days. For example, if the volatility index is 18, it means that the market is predicted to increase or decrease by 18% in the next 30 calendar days. The index varies between 15 to 35. If the india vix is below 20, it is considered that the market is less volatile and is ideal for fresh investments. This index was influenced by the Chicago Board of Options Exchange (CBOE) and was introduced in 2008. It is a non-directional index that only indicates the value of volatility but doesn’t show whether the market will go bearish or bullish.
NIFTY MIDCAP 100
NIFTY Midcap 100 is an index that captures the performance of the top 100 mid-cap companies trading in the NSE. Some key companies listed in this diversified index are Abbott India, Adani Power, Alkem Laboratories Ltd, Appollo Tyres, Ashok Leyland, Aurobindo Pharma, BHEL, Biocon, Crompton Greaves, Dr Lal Pathlabs, Fortis Healthcare, HPCL, Hindustan Zinc, Jindal Steel, Lupin, TVS Motors, United Breweries, Vodafone and many more. The Finance, Pharma companies, and Banks together constitute 30% of the midcap 100 index. Some other industries are auto ancillaries, automobiles, capital goods, cements, etc. The nifty midcap 100 index was founded in 2003 with a base value of 1000. Since its introduction, the share prices have reached the benchmark of 27,000. Like most other sectoral indices operating in the stock market, the NIFTY Midcap 100 index also corrected semi-annually.
How to invest?
You can invest in Volatility index derivatives. Futures contracts of 3 weeks duration are also available for trading. You can also purchase ETFs that are linked with the India VIX. Similarly, for NIFTY Midcap 100, you can invest in these equities directly through your trading account. You can also purchase ETFs linked with the Midcap index.
Benefits of investing in NIFTY Midcap 100
The NIFTY Midcap 100 index has outperformed over the years with ~9% returns in the last 5 years. It is a safer option to choose from the list of midcap players who have consistently performed well. Investing in these stocks allows the investor to diversify his portfolio and at the same time brings additional benefits. It is also important to track the India VIX to estimate the market volatility for the next 30 days before investing.