The Indian stock market has several indices that act as benchmarks for investors. These indices are statistical tools that reflect either the overall market or specific segments of it. You can find indices like the Nifty 50 and BSE Sensex, which are broad-market benchmarks that track the performance of market leaders. In addition to this, you can also rely on specific indices like the IndexBOM BSE mid-cap.
Gold Rate
22 Jan 2026
Many investors tend to overlook the importance of mid-cap stocks in favour of large or small-cap companies. Large-cap stocks are preferred for their stability, and small-cap stocks are famous for their growth potential. Caught between these two categories, mid-cap stocks are often ignored. However, this bias can prove to be a costly mistake because mid-cap companies are important for portfolio diversification.
They give you a more balanced mix of risk and rewards, and they can go on to become stable industry leaders over the long term. If you want to make mid-cap stocks a part of your portfolio but are unsure where to get started, the IndexBOM BSE mid-cap index can be the right place to begin.
This index consists of the mid-cap stocks listed on the Bombay Stock Exchange (BSE). In this article, we will take a closer look at what the IndexBOM BSE mid-cap index is all about. You can then make informed decisions about including stocks from this index in your portfolio.
What is IndexBOM BSE Mid-Cap?
The IndexBOM BSE mid-cap is an index that tracks the performance of mid-cap companies on the BSE. These are medium-sized entities that are not as large or well-established as large-cap companies. However, they are larger and more stable than small-cap companies.
This BSE index comprises the mid-cap stocks that trade on the exchange. Its key purpose is to track the performance of the mid-cap segment of the Indian stock market. By doing so, it acts as a benchmark for investors interested in this segment. Additionally, the IndexBOM BSE mid-cap is also a widely accepted benchmark for mutual funds and other investment products that focus on medium-sized companies.
The companies that make up this index typically have a market capitalisation ranging from Rs. 5,000 crore to Rs. 20,000 crore. However, this is only a rough estimate. Mid-cap entities are technically those companies that rank between the 101st and the 250th position in order of decreasing market capitalisation. So, the range of the market caps may be slightly over or under the estimated range.
How the Index is Constructed
The IndexBOM BSE mid-cap is one of India’s most closely watched mid-cap benchmarks. To ensure that it accurately represents the mid-cap segment of the Indian equity market, a rigorous, rules-based methodology is used to construct the index. Let us check out how this works.
Selection Criteria
The IndexBOM BSE mid-cap index does not simply pick companies ranked 101 to 250 by market capitalisation. Instead, it uses a more sophisticated approach based on cumulative market capitalisation coverage. Companies in the IndexBOM BSE mid-cap index are drawn exclusively from the BSE AllCap index, which itself represents a broad view of the Indian equity market.
Here is how the companies in the BSE mid-cap index are selected:
- Step 1: Sorting BSE AllCap Stocks
The methodology starts by sorting all the constituents of the BSE AllCap index in descending order based on their average daily total market capitalisation.
- Step 2: Classification of Constituents
Then, companies whose cumulative market cap accounts for the first 70% of the total are designated as large-cap, the next 15% are classified as mid-cap, and the final 15% constitute the small-cap segment.
This means the IndexBOM BSE mid-cap index includes all the companies that collectively represent the second 15% of India’s total equity market value. These stocks sit between the 70% and 85% cumulative market cap thresholds.
Eligibility Criteria
To ensure the index adequately represents the mid-cap segment, the BSE imposes these strict eligibility requirements:
- Companies must be domiciled in India.
- They should actively be trading on the BSE.
- New companies need a minimum trading history of six months (this may be relaxed to just one month for companies entering the market through IPOs or spin-offs).
Weighting Methodology
Once companies have been selected for the IndexBOM BSE mid-cap index, they need to be assigned their weights. Not every company is equally weighted. The index uses the free-float market capitalisation method for this purpose. So, each company’s influence on the IndexBOM BSE mid-cap index is proportional to how much of its market value is freely tradable.
The free-float market capitalisation method takes into account the share price and multiplies it by the number of shares actually available for trading in the public market. This excludes shares held by promoters, strategic investors, and other locked-in holdings.
Why does the IndexBOM BSE mid-cap index use this method? The answer is simple. It is because an index should reflect what investors can actually buy and sell, not the total theoretical value of a company.
Due to this weighting approach, larger mid-cap companies naturally have a bigger impact on the index movements. That means if a company worth Rs. 50,000 crores in free-float terms rises by 5%, it will move the index more than a Rs. 10,000 crore company making the same percentage gain.
Annual Rebalancing
The IndexBOM BSE mid-cap is reconstituted annually every September. Specifically, the new composition comes into effect when the market opens on the Monday after the third Friday of September each year.
The data used for this reconstitution is based on a specific reference date: the last trading day of July.
During this annual review, companies are reassessed based on their position in terms of cumulative market capitalisation. A company that has grown significantly might move up into the large-cap category, while one that has shrunk could slip into small-cap territory.
To prevent excessive churn, however, the BSE uses a buffer zone of plus or minus 5% around the usual boundaries for size-based classification. So, if a company’s ranking shifts within this buffer zone, it retains its current classification. This ultimately reduces any unnecessary turnover and transaction costs for mutual funds that track the IndexBOM BSE mid-cap.
Quarterly Reviews
Beyond the annual reconstitution, the IndexBOM BSE mid-cap index also undergoes quarterly maintenance reviews. If a company issues or buys back a small number of shares (less than 5%), the exchange waits and updates these changes in batches every quarter. These updates happen on the Monday following the third Friday of March, June, September, and December.
The BSE also reviews how much of each company’s stock is actually available for public trading (the “free-float”) and updates this quarterly on the same dates.
Major Changes in Constituent Companies
For more significant changes, the index committee acts swiftly. This is when a company’s outstanding shares change by 5% or more due to reasons like:
- Buybacks
- New issuances
- Warrant conversions
In such cases, the adjustment is made as soon as the data can be verified. The exchange does not wait for the quarterly review. Similarly, if a company undergoes a merger, gets delisted, faces suspension, or encounters any other major corporate event, the index is updated immediately to reflect the new reality.
The index also monitors the Graded Surveillance Measure list on a monthly basis. Any constituent added to this list is removed from the index at market open on the Tuesday following the first Monday of each month. This way, the IndexBOM BSE mid-cap index maintains its quality standards even between regular rebalancing cycles.
As you can see, the IndexBOM BSE mid-cap index is constituted, rebalanced, and reviewed using a multi-layered approach. This makes the index extremely reliable. Due to its annual reconstitution, the index accurately captures the evolving mid-cap landscape. Meanwhile, the quarterly reviews handle routine adjustments efficiently. This is why the IndexBOM BSE mid-cap index remains a reliable benchmark for investors.
Historical Performance and Growth Potential
Mid-cap stocks have historically occupied a compelling middle ground between large and small stocks in the Indian equity market. They combine the growth potential of smaller companies with greater stability than their small-cap counterparts. This is why they are particularly attractive for investors who want meaningful capital appreciation without excessive volatility.
The IndexBOM BSE mid-cap index has demonstrated this dynamic over time. It has delivered returns higher than large-cap indices during bull markets, but also remained more resilient than small-caps during downturns. Let us get into the details of the index’s performance over time.
Long-term Performance Trends
The IndexBOM BSE mid-cap performed exceptionally well in 2024, but experienced comparatively much less growth in 2025. This only reflects the segment’s characteristic volatility. Check out the numbers below.
| Period | BSE Mid-Cap Returns | BSE Sensex Returns | Performance Cap |
| 2024 | +26.1% | +8.2% | Outperformed by 17.9% |
| 2025 | +1.1% | +9.1% | Underperformed by 8.0% |
In 2025, the index posted its weakest annual performance since 2019, when it had fallen 3%. Nearly 61% of the 140 mid-cap stocks ended the year in negative territory, with 17 stocks declining 30% or more. However, top performers like L&T Finance surged 133% in 2025. What this shows you is that there is a wide dispersion of returns within the index itself.
That said, despite its high short-term volatility, the IndexBOM BSE mid-cap index has delivered strong long-term returns. Its total returns over the last five years have exceeded 140%. That said, of the 140 stocks in the BSE Mid-cap index, 86 ended 2025 with negative returns. This shows that the index performance can mask significant variations at the stock level.
Despite muted 2025 returns, however, mid-cap mutual fund schemes received Rs. 49,939 crore during 2025 (up 46% from the previous year). This is a sign of sustained investor interest in the segment.
Comparison with Large-Cap and Small-Cap Indices
There is a significant performance divergence across indices representing different market cap segments. This tells us a compelling story of how investors rotate their capital across the market. Check out the figures below:
| Index | 2024 Returns |
2025 Returns |
2-Year Total |
| BSE Small-Cap | +29.3% | -6.68% | +22.62% |
| BSE Mid-Cap | +26.07% | +0.77% | +26.84% |
| BSE Sensex (Representing Large-Caps) | +8.16% | +9.30% | +17.46% |
The data reveals a clear reversal pattern. In 2024, smaller stocks dominated with small-caps leading at 29.3% returns, followed by mid-caps at 26.07%, while the Sensex delivered a modest 8.16%. However, 2025 saw a complete role reversal, with large-caps outperforming at 9.3% while mid-caps barely gained and small-caps declined sharply. These are the key insights you can obtain from the performance of the IndexBOM BSE mid-cap index:
- Capital Rotation in Action:
Analysts attributed the underperformance of small-cap and mid-cap indices in 2025 to market normalisation. This was after their exceptional outperformance in 2023 and 2024. Depreciation of the rupee, concerns over US-India trade negotiations, and persistent foreign fund outflows led to a sharp risk-off reaction in the broader market.
- Sector Sensitivity:
Small-cap and mid-cap companies, which are more sensitive to economic slowdowns, margin pressures, and funding costs, faced higher volatility in 2025. As a result, capital rotated toward blue-chip stocks, since they are backed by stronger balance sheets and stable earnings visibility.
- Investor Behaviour Patterns:
Smaller stocks are generally bought by local investors, while overseas investors focus on blue-chip or large firms. This explains why FII outflows disproportionately impacted mid-caps and small-caps in 2025.
Risk-Return Characteristics
To understand the risk-return profile of the stocks comprising the IndexBOM BSE mid-cap index, you need to look into multiple dimensions beyond simple percentage returns. So, check out the following metrics, which reveal how mid-caps balance higher growth potential against increased volatility.
- Volatility Metrics: Mid-cap stocks typically exhibit higher volatility than large-caps, but lower than small-caps. The IndexBOM BSE mid-capindex reflects this intermediate risk profile. It may have sharper price swings during market corrections but greater stability than the BSE small-cap segment.
- Risk-Adjusted Returns: For investors who want to evaluate the returns relative to the risk taken (Sharpe ratio), mid-caps have historically offered compelling value. Over 10-year periods, mid-caps often deliver superior risk-adjusted returns compared to large-caps. This usually compensates investors adequately for the additional volatility. However, during bear markets or risk-off environments, this advantage narrows because investors flee to the safety of blue-chip stocks.
- Drawdown Analysis: Maximum drawdowns are typically steeper for stocks in the IndexBOM BSE mid-capindex. Recovery times also tend to be longer for mid-caps because institutional money flows back to large-caps first before trickling down to smaller segments. So, you need patience and a longer investment horizon to weather these drawdowns.
- Correlation with Broader Markets: The IndexBOM BSE mid-capindex shows strong positive correlation with the Sensex. This means it generally moves in the same direction as large-caps, but has more amplified movements. This correlation becomes stronger during extreme market events because systematic risk dominates. However, mid-caps can occasionally decouple during sector-specific rallies.
Why Long-Term Investors Track This Index
If you want to build wealth over decades, mid-cap indices like the IndexBOM BSE mid-cap index deserve your attention. They sit in a sweet spot. They are big enough to have proven business models, yet small enough to still grow aggressively. Many of today’s large-cap giants were yesterday’s mid-cap success stories.
Long-term investors track the BSE Mid-Cap for three compelling reasons:
● Growth Opportunities in Mid-Cap Companies
Mid-cap companies are typically past their risky startup phase but have not hit their growth ceiling yet. They have proven their business models work, secured market share in their niches, and now have the resources to expand. This makes them fundamentally different from both small-caps (too risky) and large-caps (too mature).
When you invest in mid-caps, you are essentially buying into companies on their way up. A Rs. 10,000 crore company could potentially double to Rs. 20,000 crore in 3-5 years. Meanwhile, an established large-cap with a market cap of Rs. 5 lakh crore may find such explosive growth harder. This expansion potential is why mid-caps have the potential to outperform over long periods.
● Role in Long-Term Wealth Creation
History shows that patient investors who hold mid-caps through multiple market cycles can potentially build wealth. Yes, your portfolio might swing wildly in the short term. But over 10-15 years, these swings will likely smooth out, and the growth trajectory may become clearer. The math is simple: higher growth rates have the power to compound into larger absolute gains.
This is why many investors consider the stocks in the IndexBOM BSE mid-cap index as the growth engines of their portfolios. Large-caps provide stability, small-caps offer lottery-ticket potential, but mid-caps give the possibility of sustainable, repeatable growth. They are professionally managed, audited, and liquid enough so you can exit when needed.
● Volatility Considerations and Investor Patience
Here’s the catch: mid-caps will test your nerves. When markets fall, these stocks fall harder. When panic hits, they drop really quickly. The IndexBOM BSE mid-cap index has demonstrated this many times. You need the emotional strength to watch a 20-30% drawdown and still not sell. If you check your portfolio daily and get anxious, mid-caps may not be suitable for your portfolio.
But if you can ignore the noise and stay invested, volatility becomes your friend. Market corrections may even let you buy quality mid-caps at discounts. The key is patience. You should be able to resist the urge to react to price changes every week. It can be beneficial to trust the long-term growth story because when you invest in stocks in the IndexBOM BSE mid-cap index, five years is often the minimum horizon. Sometimes, it can even be ten.
Ways to Invest in Midcap Indices
You do not need to pick individual mid-cap stocks to benefit from growth in this segment. There are simpler, less risky ways you can use to gain exposure to the entire IndexBOM BSE mid-cap index basket.
It does not matter if you prefer hands-off investing or active stock selection. What’s crucial is that you understand your options first. This will help you build the right strategy.
Here are the three main approaches you can use to track mid-cap indices:
● Index Funds and ETFs Linked to Mid-Cap Indices
Index funds and ETFs are the easiest way to invest in mid-caps if you do not want to pick the stocks yourself. You buy one fund, and it automatically comes with all the companies in the IndexBOM BSE mid-cap index. Your returns mirror the performance of the index. If it goes up 15%, so does your investment (minus small fees).
This approach offers two advantages: it is simple, and it helps with diversification. Your portfolio instantly includes 100+ companies across diverse sectors. This eliminates the risk of choosing a single wrong stock. The costs are low, too, and you do not need to constantly monitor or rebalance your stocks.
● Direct Stock Exposure vs Passive Investing
Some investors prefer picking individual mid-cap stocks instead of buying the entire IndexBOM BSE mid-cap index. This approach can deliver comparable returns if you choose the right stocks. However, it requires serious research and time, and demands high risk tolerance.
Passive investing through index funds is less exciting, but statistically, it may be the smarter choice for most people. Unless you have deep sector expertise and time for research, sticking with passive mid-cap funds may be the safer option. It helps you match the market rather than trying to beat it.
● Importance of Tracking Live Index Movements
Even if you are a passive investor, tracking the movements of the IndexBOM BSE mid-cap index live can help you time your entries and exits better. The IndexBOM BSE mid-cap index does not move in straight lines. It goes through periods of overvaluation and undervaluation, just like its constituents. Buying during corrections gets you more shares for the same money.
But this doesn’t mean you need to check prices hourly. You can monitor monthly trends and make informed decisions. For instance, if the index has rallied 40% in six months, you could maybe wait for a pullback before adding more money into this segment. If it is down 20% from peaks due to panic selling, that could indicate a buying opportunity.
Conclusion
This concludes our article on the IndexBOM BSE mid-cap index. You now know how the index represents India’s most dynamic growth segment, and includes companies mature enough to survive, yet small enough to potentially multiply wealth over decades. Track it using reliable apps like Samco Securities, so you can make informed decisions instead of guessing your next move.
