Alpha hunting in mid-caps focused on defence, financials, and IT

3 Jun 2025 , 12:06 PM

DEFENCE AND FINANCIALS TRIGGER MID-CAP BOUNCE

April had seen mid-cap returns sobering after the run in March. However, between April and May 2025, the monthly returns bounced from 4.75% to 6.09%. There were 3 stories that triggered the sustained bounce in May 2025. Firstly, defence stocks were again among the top performers; thanks to higher defence allocation by the government. The volatile border situation is also expected to coax the government to enhance its defence budget further. Secondly, mid-cap IT appears to be doing much better than large cap IT, and this is evident in the number of IT stocks that are in the top list. Thirdly, financials are attracting interest as a domestic play, but more importantly, it is the PSU banks that are among the key performers this month on the back of better than expected quarterly results in Q4FY25.

TRACKING MID-CAP MOMENTUM RETURNS IN MAY 2025

In terms of 1-month returns, the Nifty Mid-Cap 100 gave 6.09%. Out of the 93 eligible stocks in the index, 72 stocks gave positive returns, while 21 stocks gave negative returns. Here are the top-15.

Stock Symbol	Market Price	1-Mth Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
BDL	2,007.00	31.77%	30.24%	2,096.60	890.00	125.51%	4.27%
MOTILALOFS	806.50	24.08%	-64.34%	1,064.00	474.80	69.86%	24.20%
COCHINSHIP	1,943.60	22.35%	-0.51%	2,979.45	1,180.20	64.68%	34.77%
SOLARINDS	16,045.00	22.26%	75.54%	16,305.00	7,888.25	103.40%	1.59%
YESBANK	21.47	21.22%	-4.75%	27.44	16.02	34.02%	21.76%
TATATECH	771.00	17.60%	-26.32%	1,136.00	597.00	29.15%	32.13%
SUPREMEIND	4,145.00	17.16%	-24.67%	6,460.00	3,095.00	33.93%	35.84%
COFORGE	8,549.00	17.05%	71.11%	10,026.80	4,722.95	81.01%	14.74%
UNIONBANK	147.00	16.70%	-3.81%	172.50	100.81	45.82%	14.78%
CONCOR	778.55	16.43%	-26.42%	1,180.00	601.25	29.49%	34.02%
RVNL	405.00	15.94%	5.94%	647.00	305.00	32.79%	37.40%
NATIONALUM	180.54	15.26%	-4.83%	262.99	137.75	31.06%	31.35%
MFSL	1,500.00	15.15%	62.16%	1,516.10	864.00	73.61%	1.06%
BHEL	260.10	14.54%	-10.63%	335.35	176.00	47.78%	22.44%
ATGL	681.40	13.92%	-28.42%	1,190.00	532.60	27.94%	42.74%

Data Source: NSE

In terms of sectoral mix; the top-15 had 4 BFSI Stocks (Motilal Oswal, Yes Bank, Union Bank, and Max Financial), and 4 Defence stocks (Bharat Dynamics, Solar Industries, BHEL, and Cochin Shipyards). The others were sectorally distributed, although mid-cap IT appears to be emerging as a star sub-sector. The worst performers in May 2025 were bottom-up plays, and included Patanjali, Torrent Power, Dixon, and Jubilant Foods.

HOW MID-CAPS DELIVERED ON 1-YEAR RETURNS?

Mid cap stocks as a whole, delivered 11.65% in last one year. Out of 93 mid-cap stocks, only 1 stock (Paytm) gave more than 100%, while 7 stocks gave over 50% returns. A total of 50 stocks gave negative returns yoy. Here are the top-15.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
PAYTM	889.00	2.97%	135.94%	1,062.95	339.55	161.82%	16.36%
BHARTIHEXA	1,826.00	8.38%	81.18%	1,858.00	909.45	100.78%	1.72%
SOLARINDS	16,045.00	22.26%	75.54%	16,305.00	7,888.25	103.40%	1.59%
COFORGE	8,549.00	17.05%	71.11%	10,026.80	4,722.95	81.01%	14.74%
MFSL	1,500.00	15.15%	62.16%	1,516.10	864.00	73.61%	1.06%
PERSISTENT	5,625.00	5.95%	60.30%	6,788.90	3,232.05	74.04%	17.14%
DIXON	14,680.00	-10.70%	57.84%	19,148.90	8,453.00	73.67%	23.34%
POLICYBZR	1,752.30	8.39%	48.03%	2,246.90	1,161.30	50.89%	22.01%
KALYANKJIL	560.00	8.49%	45.62%	795.40	336.05	66.64%	29.60%
MAXHEALTH	1,125.00	2.46%	44.13%	1,227.95	743.10	51.39%	8.38%
SBICARD	919.75	5.44%	32.71%	930.65	647.95	41.95%	1.17%
MUTHOOTFIN	2,204.00	2.10%	32.34%	2,435.40	1,579.10	39.57%	9.50%
JUBLFOOD	656.00	-8.37%	30.29%	796.75	468.70	39.96%	17.67%
BDL	2,007.00	31.77%	30.24%	2,096.60	890.00	125.51%	4.27%
SRF	2,862.00	-4.92%	28.69%	3,098.50	2,089.10	37.00%	7.63%

Data Source: NSE

On a yoy basis, the list was spread out across several sectors, although some favourites did emerge. Some of the themes include Financial Inclusion (Paytm, Max Financial, Policybazaar, SBI Cards, and Muthoot Finance); IT (Coforge, Persistent); Defence (Solar Industries, Bharat Dynamics Ltd); and Consumer Facing (Kalyan Jewellers and Jubilant Foods). The names at the bottom were stock specific names like IGL, Vodafone Idea, Phoenix, Oil India, Hindustan Zinc, and SJVN.

HOW RESILIENT WERE MID-CAP STOCKS IN LAST ONE YEAR?

In terms of bounce from the lows, the mid-caps overall bounced 22.52%. Total of 6 stocks more than doubled, and 16 jumped over 50%. Top-20 average bounce was 90.26%.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
BSE	2,669.00	-57.95%	4.67%	2,690.00	705.00	278.58%	0.78%
MAZDOCK	3,475.00	13.76%	5.56%	3,775.00	1,200.00	189.58%	7.95%
PAYTM	889.00	2.97%	135.94%	1,062.95	339.55	161.82%	16.36%
BDL	2,007.00	31.77%	30.24%	2,096.60	890.00	125.51%	4.27%
SOLARINDS	16,045.00	22.26%	75.54%	16,305.00	7,888.25	103.40%	1.59%
BHARTIHEXA	1,826.00	8.38%	81.18%	1,858.00	909.45	100.78%	1.72%
COFORGE	8,549.00	17.05%	71.11%	10,026.80	4,722.95	81.01%	14.74%
PERSISTENT	5,625.00	5.95%	60.30%	6,788.90	3,232.05	74.04%	17.14%
DIXON	14,680.00	-10.70%	57.84%	19,148.90	8,453.00	73.67%	23.34%
MFSL	1,500.00	15.15%	62.16%	1,516.10	864.00	73.61%	1.06%
MOTILALOFS	806.50	24.08%	-64.34%	1,064.00	474.80	69.86%	24.20%
KALYANKJIL	560.00	8.49%	45.62%	795.40	336.05	66.64%	29.60%
COCHINSHIP	1,943.60	22.35%	-0.51%	2,979.45	1,180.20	64.68%	34.77%
HUDCO	241.45	7.96%	-7.91%	353.70	158.85	52.00%	31.74%
MAXHEALTH	1,125.00	2.46%	44.13%	1,227.95	743.10	51.39%	8.38%

Data Source: NSE

On resilience score, the list was dominated by 4 new age tech (Paytm, Dixon, Coforge, and Persistent); 4 Financial Inclusion stocks (BSE, Max Financial, Motilal Oswal, and HUDCO); 4 Defence stocks (Mazagon Docks, BDL, Solar Industries, and Cochin Shipyards). The list was largely synced with 1-year return rankings. The list at the bottom included ACC, Colgate Palmolive, Vodafone Idea, Voltas, M&M Financial, Aurobindo Pharma, and Torrent Power.

HOW CLOSE WERE MID-CAPS TO THE YEARLY HIGHS?

In terms of proximity to the peak, the index was still 5.75% short of the peak. Total of 18 stocks are less than 10% to the peak while 27 stocks are still over 30% from peak levels.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
BSE	2,669.00	-57.95%	4.67%	2,690.00	705.00	278.58%	0.78%
MFSL	1,500.00	15.15%	62.16%	1,516.10	864.00	73.61%	1.06%
SBICARD	919.75	5.44%	32.71%	930.65	647.95	41.95%	1.17%
SOLARINDS	16,045.00	22.26%	75.54%	16,305.00	7,888.25	103.40%	1.59%
BHARTIHEXA	1,826.00	8.38%	81.18%	1,858.00	909.45	100.78%	1.72%
HDFCAMC	4,783.00	9.34%	27.59%	4,891.00	3,415.55	40.04%	2.21%
APLAPOLLO	1,800.00	11.85%	18.16%	1,851.00	1,272.70	41.43%	2.76%
INDIANB	614.00	8.98%	6.53%	632.70	473.90	29.56%	2.96%
MARICO	718.00	0.84%	19.96%	740.20	577.85	24.25%	3.00%
BDL	2,007.00	31.77%	30.24%	2,096.60	890.00	125.51%	4.27%
MRF	1,38,700.00	3.24%	10.68%	1,47,435.00	1,02,124.05	35.82%	5.92%
FEDERALBNK	202.20	2.74%	26.05%	217.00	148.00	36.62%	6.82%
PAGEIND	46,175.00	1.68%	22.17%	49,849.95	35,731.05	29.23%	7.37%
SRF	2,862.00	-4.92%	28.69%	3,098.50	2,089.10	37.00%	7.63%
MAZDOCK	3,475.00	13.76%	5.56%	3,775.00	1,200.00	189.58%	7.95%

Data Source: NSE

In terms of proximity to the peak, the list is dominated by 6 financials (BSE, Max Financial, SBI Cards, HDFC AMC, Indian Bank, Federal Bank); 3 Defence stocks (Solar Industries, Bharat Dynamics, Mazagon Docks); FMCG (Marico, Page Industries). Companies farthest from the peak were stocks like Vodafone Idea, Oil India, IREDA, ATGL, SJVN, Hindustan Zinc, and Exide Industries. The good news is that the month has seen some active alpha hunting in mid-cap stocks; although the sectoral preferences are still limited to financials, defence, and IT.