Investors at times, struggle to figure out which part of the market they should target in quest for achieving their financial goals and tolerance for risk. Two leading indexes, the Nifty Smallcap 100 and the Nifty Midcap 50, have gained much prominence for those who seek to invest under the condition of high-risk, high returns. So let us examine the specific characteristics of these indices and try to compare them and help you make a good investment.
Nifty Smallcap 100 Index
The Nifty Smallcap 100 index actually captured one hundred small-cap companies that function within the NSE itself. These are new-generation innovative firms, mostly operating in specialist areas of business, as well as firms with high growth prospects. It would warrant investment in the nifty small capital one hundred index since some of them are new companies with better prospects equal to new opportunities in the market.
Most of these firms are in specific areas of operation or small specialized consumer markets and offer different products or services. While they may be relatively risky to invest in compared to their larger counterparts, they have the potential to provide substantial returns on investments to their shareholders in the future mergers and acquisitions that see them take up even broader and definitive market spaces.
Nifty Midcap 50 Index
Nifty Midcap 50 index provides information on the top mid-cap companies that are listed on the NSE. They are normally large-scale organizations that have been in operation for a while and have considerable recognition in the market. They tend to function across numerous industries including consumer goods, industrial products and healthcare, selling to a wider populace.
By investing in the Nifty Midcap 50 index, one gets involved in companies with good growth phase companies, which have the prospects of furthering their operations and thereby building market share. Pundits may be right to argue that these firms could provide a blend of growth and value creation, which investors may find ideal for the growth of long-term capital.
Risk and Volatility
It is for this reason that small cap firms are usually deemed as higher-risk investments since they are more volatile as well as prone to being affected by market swings. It is also found that the Nifty Smallcap 100 index has relatively higher volatility and base levels of risk that may be more pronounced as compared to the Nifty Midcap 50 index. Some of the strategies, like investing in nifty small cap 100, may be suitable for investors who are willing to take more risk and are in it for the longer term.
Conclusion
The decision to choose Nifty Smallcap 100 or Nifty Midcap 50 thus depends on your financial goals, tolerance to risk and time horizon. Hence, it can be said that the Nifty Smallcap 100 index may be a better option for those investors who are looking forward to higher returns from the smallcap companies at the cost of the risks involved, whereas the Nifty Midcap 50 index can be quite appropriate for investors who are looking forward to midcap companies at the same time with risks but with an average return in comparison to Nifty Smallcap 100 index.
