Midcaps outperform Nifty50; check top stock picks for your portfolio

Broader markets have outperformed benchmark indices so far in CY26, even as volatility persists amid escalating geopolitical tensions in West Asia, elevated crude oil prices, and sustained foreign investor outflows from equities.

 

The Nifty Midcap 100 index has risen 1.27 per cent year-to-date. In contrast, the benchmark Nifty50 has declined 8.85 per cent, while the Nifty Smallcap 100 index has gained 4.58 per cent over the same period.

 

Earlier, on May 7, the Nifty Midcap 100 index scaled a fresh record high, crossing the 62,000-mark for the first time to touch 62,094.40, surpassing its previous peak of 61,548.

 

Valuation comfort, resilient earnings aid rally

While describing midcaps as a stock-specific universe, analysts attributed the outperformance to healthy valuation normalisation in the segment over the past few quarters.  “Valuations in the Nifty Midcap 100, which had turned relatively overheated around September 2024, have undergone healthy normalisation over the past few quarters, with the correction further amplified by Iran-related geopolitical concerns. As a result, a large part of the excess froth has been absorbed, bringing valuations closer to more reasonable levels relative to earnings growth,” said Ajit Mishra, SVP-Research, Religare Broking.

 

At the same time, corporate earnings across several mid-cap segments continue to remain resilient, supported by domestic demand, capex momentum, and improving balance sheets. This, Mishra said, creates room for the broader uptrend to sustain into 2026.

 

“However, the durability of the rally will likely hinge on geopolitical stability, particularly an earlier-than-anticipated easing of the Iran situation, alongside the continuation of strong earnings delivery across the mid-cap universe,” he added.

 

Echoing similar views, Kranthi Bathini, Equity Strategist at WealthMills Securities, said the segment had earlier undergone a phase of consolidation.

 

“Typically, when headline indices underperform, mid- and small-cap stocks tend to lag as they are high-beta in nature. However, despite the broader market trend, Indian mid-caps have outperformed,” Bathini said. He added that the gains have largely been driven by stock-specific domestic growth stories.

 

“This is a highly stock-specific universe. Domestic growth stories have outperformed in India. For instance, Hitachi Energy reflects the power growth theme, while BSE is linked to the domestic financialisation story,” said Bathini.  CHECK Stock Market LIVE Updates

Hitachi Energy India, BSE lead gains

Among individual stocks, Hitachi Energy India, BSE Ltd, GE Vernova T&D India, Billionbrains Garage Ventures (Groww), and Bharat Heavy Electricals have emerged as the top gainers in the Nifty Midcap 100 universe so far in CY26.

 

Hitachi Energy India has rallied 82.30 per cent, followed by BSE at 46.35 per cent. GE Vernova T&D India has advanced 45.67 per cent, Billionbrains Garage Ventures has gained 34.99 per cent, while Bharat Heavy Electricals has risen 34.27 per cent.

 

Other notable gainers include Multi Commodity Exchange of India, up 33.49 per cent, National Aluminium Company (Nalco) at 29.35 per cent, Bharat Forge at 27.43 per cent, Steel Authority of India at 26.57 per cent, and Oracle Financial Services Software at 26.12 per cent. 

Top stock picks

Analysts said investors currently prefer businesses where earnings visibility remains strong and valuations remain reasonable relative to long-term growth potential. On investment strategy, Bathini recommended a constructive approach. “Given their strong fundamentals and positive outlook, investors can look at buying on dips in a staggered manner. A staggered approach is extremely crucial,” he said.

 

Within the Nifty Midcap 100 basket, Mishra prefers REC, Power Finance Corporation, Lupin, KEC International, NCC Limited, and Crompton Greaves Consumer Electricals. “REC and PFC continue to benefit from the structural power and transmission capex cycle, while still trading at reasonable valuations despite strong earnings delivery. Lupin stands out within pharma due to improving US business traction, margin expansion, and a healthier product mix. KEC and NCC are well positioned to benefit from the ongoing infrastructure and ordering cycle, with execution momentum remaining robust,” said Mishra.

 

Among consumer-facing names, Mishra said Crompton appears attractive as demand recovery, premiumisation, and margin improvement gradually begin reflecting in earnings.   

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(Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.)