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NIFTY SMLCAP 100
The Nifty Smallcap 100 is a stock market index on the National Stock Exchange (NSE) that tracks the performance of 100 small-cap companies. These are firms ranked from 251 to 350 based on full market capitalisation within the Nifty 500 universe. The index is considered a benchmark for investors seeking exposure to the small-cap segment of the Indian equity market.
It offers a diversified view of businesses operating at the smaller end of the market capitalisation spectrum. The Nifty Smallcap 100 includes companies from multiple sectors, making it an essential tool for assessing the overall performance of small-cap stocks. Investors and analysts use it to track trends, design mutual funds, or benchmark their own portfolios focused on emerging and growth-oriented companies.
The Nifty Smallcap 100 index was launched by the National Stock Exchange (NSE) in 2005 to provide investors with a reliable measure of the performance of small-cap companies in India. Initially created to complement other broad-market indices like the Nifty 50 and Nifty Midcap 100, it offered a clearer insight into the small-cap segment.
Over the years, the index has evolved to include sectoral diversification and better representation. The Nifty Smallcap 100 has witnessed several economic and market cycles, including the 2008 financial crisis and the COVID-19 market shock. Its performance often reflects high volatility and growth potential, typical of small-cap investments. Today, it is a crucial barometer for gauging the health of India’s small-cap ecosystem.
The Nifty Smallcap 100 helps investors understand how smaller companies are performing within the broader Indian economy. These firms often offer higher growth potential but come with greater risk. The index makes it easier to evaluate small-cap trends without analysing each stock individually, saving time and effort for investors.
It is also used as a benchmark for small-cap mutual funds, portfolio performance tracking, and economic research. With sectoral diversity and representation, the index captures the dynamism of emerging enterprises. Without it, investors would lack a unified and systematic way to measure the performance of this volatile yet rewarding market segment.
The Nifty Smallcap 100 functions like most equity indices. It includes 100 small-cap stocks selected based on market capitalisation and liquidity criteria. The stocks are reviewed semi-annually, and changes are made based on eligibility and performance. This ensures that the index stays relevant and representative of the small-cap universe.
It is calculated using the free-float market capitalisation method. Only actively traded shares held by the public are considered. The performance of the index is tracked on a real-time basis during trading hours and is widely used by asset managers and individual investors to construct small-cap-focused investment strategies.
Investors can access the Nifty Smallcap 100 index in several ways. The most common method is through small-cap mutual funds or exchange-traded funds (ETFs) that track the index. These instruments replicate the index composition and aim to deliver similar returns, offering easy entry for retail investors.
Alternatively, investors may view index performance on financial platforms, the NSE website, or brokerage dashboards. Advanced investors can build customised portfolios based on the index stocks. Real-time and historical data for the Nifty Smallcap 100 are also accessible through financial data providers and trading applications for analysis and strategy building.
Consider an investor looking to diversify their portfolio with high-growth stocks in India. Instead of picking individual small-cap shares, they invest in a mutual fund that tracks the Nifty Smallcap 100. Over the years, the fund provides exposure to high-potential businesses across industries, including healthcare, manufacturing, and IT.
During a market uptrend, the investor observes the fund delivering higher returns than large-cap benchmarks. Even though volatility is high, the long-term growth prospects of small companies pay off. This real-world example illustrates how the index serves as both a performance indicator and a foundation for investment in smaller, fast-growing businesses.
Use expert analysis and research tools before making investment decisions.
The Nifty Smallcap 100 index is designed to reflect the behaviour and performance of the small capitalised segment of the financial market. The Nifty Smallcap 100 index comprises of 100 tradable, exchange listed companies.
The Nifty Smallcap 100 index aims to provide investors with potentially higher returns over the long-term by tapping into the growth potential of these smaller but promising companies at lowest cost. However, small cap companies are incredibly volatile, and investors can see losses in short to medium term. Therefore, the Nifty Smallcap 100 index involves a high risk and high reward trade-off for investors.
The Nifty Smallcap 100 index represents about 5% of the free float market capitalization of the stocks listed on NSE as on September 29, 2023. The total traded value for the last six months ending September 2023, of all index constituents is approximately 9.5% of the traded value of all stocks on NSE. Therefore, the Nifty Smallcap 100 index contributes to the overall health and trends of the Indian stock market by reflecting the performance of the small cap segment, which is often considered as a proxy for the economic growth and innovation potential of the country.
The Nifty Smallcap 100 index adapts to technological advancements and disruptive innovations within the small-cap space by periodically rebalancing its portfolio based on the latest market capitalization and liquidity criteria of the companies. The index also follows a quality-based approach to select the companies that have a positive net worth, positive earnings per share, and a minimum trading frequency of 90%.
The performance of Nifty small-cap fund depends on the specific fund that tracks the Nifty Smallcap 100 index. According to the web search results, there are several funds that invest in the Nifty Smallcap 100 index, such as HDFC NIFTY Smallcap 250 ETF, DSP Nifty Smallcap250 Quality 50 Index Fund, and others. The returns of these funds may vary depending on their expense ratio, tracking error, portfolio composition, and other factors. You can compare the performance of different Nifty small-cap funds on various websites.
Nifty Smallcap 100 stocks represent the top 100 small-cap companies listed on NSE. These companies are chosen based on free-float market capitalization, offering investors access to emerging firms with high growth potential alongside greater risk and market volatility.
The NSE launched the Nifty Smallcap 100 Index in 2005. It serves as a benchmark for tracking small-cap companies, typically with lower market capitalization, presenting substantial growth opportunities and significant returns for investors.
It is possible to trade shares in the Nifty Smallcap 100 Index on NSE. These shares are publicly listed and accessible for trading. Investors capitalize on emerging companies' growth potential in India’s equity markets through this index.
Yes, shares within the Nifty Smallcap 100 Index can be purchased and sold the next day, depending on market conditions and liquidity. This flexibility enables investors to adjust portfolios or seize short-term opportunities in the market.
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