It’s time for smallcaps and midcaps to take a break as largecaps are ready for revenge
I told you that Smallcaps and Midcaps would continue their rally.
The Nifty50 index rallied continuously for 5 months from March’23 to July’23. Since 2010, there have been only 4 instances where the index has rallied continuously for 5 or more months.
As shown in the table below, the Nifty50 has yielded double-digit returns in all of these periods with the average return being 23.08%. In the next 6 months, the broader index enters a consolidation phase giving modest returns of 0.58%.
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Here’s how the Nifty Midcap 100 Index and the Nifty Smallcap 100 Index returned during this period.
The Nifty Midcap 100 Index and Nifty Smallcap 100 Index have always outperformed the Nifty50 index surging on an average by 30.50% and 30.80% respectively. However, unlike the Nifty50 index which enters a consolidation phase, the Nifty Midcap 100 and Nifty Smallcap 100 indices continue their upward rally, soaring with average gains of 6.30% and 8.10% in the next 6 months.
This time, the Nifty’50 returned 9.98% in the next 6 months from Aug’23 to Jan’24. However, the Nifty Midcap 100 and Nifty Smallcap 100 soared 28.76% and 36.94% respectively, outperforming the Nifty50 index.
But, what happens after this period?
In the next 6 months following this period, the Nifty50 has delivered a return of 4.02%. After the consolidation phase of 6 months, the Nifty50 starts its upward rally.
However, the Nifty Midcap 100 and Nifty Smallcap 100
