Key differences in S&P BSE Smallcap & S&P BSE Midcap

The Bombay Exchange Unit is the first substantial Indian stock exchange unit and was established even before NSE. Hence, it is one of the oldest. It lists around 5300 companies and is considered one of the largest stock exchange units. 

The BSE had joined hands with the renowned, globally acclaimed organisation S&P to maintain its popular indices. Two of the appreciable and diverse indices are small-cap and mid-cap. 

Investors must inspect and acknowledge these two indices’ various benefits and risks before pledging their funds. However, due to the disparity in market capitalisation, they differ from each other. 

You must be well versed with the key differences for more improved decisions. Read this article to learn about S&P BSE Smallcap and Midcap in detail. Additionally, you will also come across the significant differences between these two. 

What is S&P BSE Smallcap

As recorded on 7th July 2024, this index consists of 997 low-index companies. The BSE Smallcap is an amalgamation of companies with lesser market capitalisation and trading volume. Hence, though they may be volatile and more susceptible to risks, calculated moves can help garner hefty profits. 

These stocks usually proliferate and are mainly influenced by external factors like geopolitical events, budget announcements, and other corporate actions. Balancing your portfolio with some small-cap stocks is always advised to ensure a growth profile. 

The market capitalisation is calculated by multiplying the stock price with the tradable quantity of shares. It is a dynamic sector that offers both benefits and poses challenges. Hence, over time, it has been through multiple rises and falls.

Hence, investors are advised to conduct qualitative and quantitative research before investing in BSE smallcap. These will help you to decipher when and how you should invest in this index. Additionally, it will help you to strategise methods to mitigate potential risks. 

What is S&P BSE Midcap

The S&P BSE Midcap is a medium-sized index that bridges the gap between large and small caps. It consists of 126 companies listed in this index. These companies are selected from multiple stock market sectors, such as finance, healthcare, technology, etc. The selection depends on the market capitalisation and trading volume. 

The midcap is becoming more attractive for investors seeking a secured channel to diversify their portfolio. As it deals with medium-sized companies, it enables investors to choose undervalued stocks with growth potential. 

The BSE Midcap is calculated using a free-float market capitalisation-weighted methodology, reflecting the stocks’ MC. These figures help determine the strengths and weaknesses of the index. Moreover, the fluctuation in the share prices affects the index’s overall value. 

Tabular Representation Of Their Differences

Let us glance over the key differences between these two:  

Point Of Difference	S&P BSE Midcap	S&P BSE Smallcap
No. of Companies	It has 126 companies with medium market capitalisation.	It had 997 lower-index companies under it.
Growth Potential	The potential is less than small caps. However, it has an appreciable overall growth potential.	Higher potential for growth since it is smaller in size.
Select Index	The S&P BSE MidCap Select Index tracks the 30 top companies from the BSE Midcap index.	The S&P BSE SmallCap Select Index contains the top 60 companies from the Smallcap Index.
Liquidity	This index has a higher liquidity than BSE Smallcap.	It has lesser liquidity due to lower trading volumes.
Risk Percentage	Less risk since some of the companies have significant market share.	More risk quotient as higher fluctuations in prices

Wrapping Up

S&P BSE Mid and Smallcap constitute a large section of the BSE unit. Moreover, due to their lucrative growth opportunities, they often enjoy the limelight of the stock market. Hence, make sure you are aware of their differential properties before investing. You can also use Motilal Oswal’s Research 360 to monitor the uptrends and downtrends of the BSE Sensex.