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Top Mid Cap Stocks to buy in for a Diversified Portfolio

Top Mid Cap Stocks to buy in for a Diversified Portfolio
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Stocks in the stock market are often classified based on their market capitalisation. This categorisation helps investors to make informed investment decisions.
If you’re looking to invest in equities, you’ve probably heard of large cap and small cap shares, but what about mid cap stocks? In this comprehensive guide, we’ll explain what midcap stocks are, about the NIFTY midcap index and how to invest in them.

What are Mid Cap Stocks?

Mid cap stocks in India have a market capitalisation of more than ₹5,000 crores but less than ₹20,000 crores and fall in between small cap stocks and large cap stocks.

Mid cap companies tend to show an upward trend in their market capitalisation, valuation and profits.

List of Trending Midcap Stocks List 2023

Stock NameSub-SectorMarket Cap (in Cr)Total Debt 5-Year CAGRShare Price
Indian Hotels Company LtdHotels, Restaurants & Leisure₹54,4793,139.0126.13₹420.9
Punjab National BankPublic Banks₹55,520--7.09₹63
Polycab India LtdElectrical Components & Equipments₹53,904191.47-₹5,123.05
One 97 Communications LtdBusiness Support Services₹53,904221.50-₹853.9
Astral LtdBuilding Products₹52,50298.3034.57₹1,954.05
Cummins India LtdMachinery₹52,19124.17417.53₹1,707.75
IDFC First Bank LtdPrivate Banks₹52,85015.19-₹93.35
AU Small Finance Bank LtdConsumer Finance₹49,89517.67-₹723.55
Abbott India LtdPharmaceuticals ₹48,25226.00151.69₹23,109.55
Ashok Leyland LtdMachinery₹ 48,0355.9824,145.02₹183.85

The data is from 31st August 2023.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

Why Should You Invest in Midcap Stocks?

  • Mid cap stocks offer the best of largecap and smallcap stocks as they provide returns with moderated risk. Mid cap companies have a higher chance of expansion & growth than small cap companies; thus, a higher potential for growth exists.
  • There is also a higher return potential as they allow substantial dividends and will allow value appreciation since they are in their growth phase.
  • There is more information available to read and analyse about midcap shares than smallcap shares, so an investor can do a details analysis of the information before making a decision.

However, there are also risks associated with investing in mid-cap shares. They can be more volatile than largecap stocks and are more likely to be impacted by market downturns. Additionally, midcap share price may have less liquidity, making it harder to sell them quickly.

Top 3 Mid Cap Stocks in India

Here is a brief overview of the top 3 Mid-Cap stocks in India. 

Indian Hotels Company Ltd

The Indian Hotels Company Limited is a holding company engaged in short-term accommodation activities, and restaurants and mobile food service activities. On a trailing 12-month basis, it records an operating revenue of Rs. 6,010.21 Cr, showcasing an outstanding annual revenue growth of 85%. It maintains a great pre-tax margin of 22% and achieves a good return on equity (ROE) of 12%.

Punjab National Bank

Punjab National Bank (PNB or the Bank) is a public sector bank, providing various banking services, such as digital banking, personal banking, social banking, micro, small and medium enterprises banking, agricultural banking, corporate banking etc. On a trailing 12-month basis, it generates an operating revenue of Rs. 106,590.57 Cr, reflecting good annual revenue growth of 12%. However, the pre-tax margin is only okay at 5%, and the return on equity (ROE) is fair at 3%, indicating a need for improvement.

Polycab India Ltd

Polycab India is a manufacturer and seller of wires and cables and fast moving electrical goods. The Company’s product line includes electric fans, LED lighting and luminaires, switches and switchgears under the ‘POLYCAB’ brand. On a trailing 12-month basis, it generates an operating revenue of Rs. 15,260.60 Cr, demonstrating an outstanding annual revenue growth of 16%. It maintains a healthy pre-tax margin of 12% and achieves an exceptional return on equity (ROE) of 19%.

Investing in midcap stocks with smallcase

You can also invest in a basket of mid cap stocks via smallcase. Simply go to smallcase.com or the smallcase app, and log in via your phone number. Then, go to ‘Discover‘ and enter ‘midcap‘ in the search bar and hit enter. You’ll find an array of stock portfolios that have mid cap companies. You can filter the choices based on minimum investment amount, volatility, or the theme of the smallcase. Just pick the one that fits your investment criterion.

Make sure that you do your diligent research before picking the right stock, keeping in mind your long-term investment goals and risk appetite.

How to Invest in Mid Cap Stocks?

Any investment portfolio should have an ideal mix of smallcap, midcap, and largecap stocks which helps in diversification and minimising risk in the long run.

One can buy top midcap shares in India individually or by buying mutual funds or exchange-traded funds (ETFs) that invest in mid cap companies. Growth and value investing strategies are often used when investing in NSE midcap stocks. Funds and ETFs may occasionally own a range of equities and asset types, including mid cap shares. Other times, the funds or ETFs may only invest in mid cap companies.You can track the best performing mid cap companies in India with the help of the Nifty Midcap index which captures the movements and forms a benchmark of the midcap segment of the market. You can then invest in individual stocks from the Nifty Midcap 100 index with your Demat account.

However, if you’re confused about which stocks to pick, you can explore smallcases:

  1. smallcases are readymade portfolio of stocks/ETFs, that are based on a theme idea or strategy.
  2. They’re created and managed by SEBI-registered experts,
  3. smallcase.com offers over 200+ stock portfolios, created by 180+ managers.
  4. Some of the popular smallcases among new investors are as follows:

Equity & Gold smallcase by Windmill Capital

Top 100 Stocks smallcase by Windmill Capital

Disclosures for aforementioned smallcases

What are the Various Features of Mid Cap Stocks?

  • Volatility: These are less volatile than small-cap stocks but more volatile than largecap stocks. Mid cap companies have just entered the growth stage, so their position in the market is considered volatile. 
  • Low Liquidity: Mid cap companies are more liquid than smallcap companies since these companies are well-known and can be trusted,  so it’s easier to find a buyer for these stocks at a fair price. 
  • Growth: Mid cap companies have an abundance of opportunities to grow and turn into largecap companies with time. They are in their growth stage, so the rate of growth is rapid and is comparable to largecap stocks.

Advantages of investing in Mid Cap Stocks.

These are the advantages of investing in Mid-Cap Stocks. 

  • Unlocking Growth Potential: Mid-cap companies continue their rapid expansion, potentially gaining broader market recognition and substantial stock price growth.
  • Enhanced Diversification: While many investors begin with large-cap or multi-cap stocks, incorporating mid-cap stocks into your portfolio offers valuable diversification. This addition can help mitigate overall portfolio volatility.
  • Expert-Led Active Management: Experienced share managers specialize in actively overseeing mid-cap stocks, identifying high-growth potential companies. Fund houses employ dedicated teams for in-depth research, financial analysis, and active monitoring of portfolio company performance.

To Wrap It Up…

Investing in midcap stocks can be a great way to build a diversified investment portfolio and achieve long-term growth. However, it’s important to understand the risks associated with midcap stocks and conduct thorough research and analysis before investing.


1. What are the best Mid Cap Stocks in India?

The best Mid-Cap Stocks in India are:
1. Indian Hotels Company Ltd
2. Punjab National Bank
3. Polycab India Ltd

2. How can I invest in Mid-Cap  stocks?

You can also invest in a basket of mid cap shares via smallcase. Simply go to smallcase.com or the smallcase app, and log in via your phone number. Then, go to ‘Discover‘ and enter ‘midcap‘ in the search bar and hit enter. You’ll find an array of stock portfolios that have mid cap companies.

3. Is it a good time to invest in Mid Cap stocks?

They offer portfolio stability while preserving a stronger growth potential than large-caps, delivering a valuable boost. The investment landscape for the remainder of 2023 holds promising opportunities with mispriced stocks readily visible.

4. Who Should Invest in Mid Cap Stocks?

Moderate-risk profile investors seeking significant exposure in mid-cap and small-cap segments can explore Midcap Stocks. These funds diversify across market caps, offering lower risk compared to pure Mid Cap Stocks and pure Small Cap stocks.

5. Can Mid Cap stocks be profitable for investors?

While subject to interpretation, mid-cap shares outperform small-cap stocks in specific scenarios. Small-cap stocks, despite potentially delivering greater growth and returns, exhibit high volatility. Consequently, mid-cap stocks provide a balance of solid returns, stability, and affordability.