Midcap roller-coaster: Sharp falls of over 20% can happen once every 4.2 years — here’s what you need to know
Midcap stocks are often associated with higher growth potential, but they also come with sharper bouts of volatility. The Nifty Midcap 150 has experienced multiple periods of steep declines over the past two decades, including five instances when the index fell more than 20%.
For investors, however, the risk is not limited to seeing their portfolio fall during a correction. Trying to avoid every sharp decline can create another risk: missing the recovery.
A study by Abakkus Mutual Fund, which analysed the Nifty Midcap 150 between April 2005 and August 2026, illustrates how quickly the cost of missing strong market days can compound over the long term.
How frequently can midcaps fall sharply?
The data shows that corrections are not unusual for the Nifty Midcap 150. Smaller declines occurred relatively frequently, while more severe falls were less common but still appeared several times during the 21-year period.
| Fall in Nifty Midcap 150 | Occurrences | Average frequency |
| 5–10% | 17 times | Once every 1.2 years |
| 10–20% | 8 times | Once every 2.6 years |
| More than 20% | 5 times | Once every 4.2 years |
*Source: Abakkus Mutual Fund, Data from April 2005 to August 2026
More severe market corrections, with the index declining by over 20%, occurred five times over the 21-year period, or roughly once every 4.2 years on average. This means investors in midcaps need to be prepared for periods when their portfolios can fall significantly from previous highs.
As of 31 August 2026, the Nifty Midcap 150 stood at 23,537, sitting just 0.01% away from achieving a complete recovery cycle, according to the study.
Does avoiding a correction necessarily protect long-term wealth?
This is where the study becomes more relevant for investors. According to Abakkus Mutual Fund, ₹10,000 invested in the Nifty Midcap 150 TRI in April 2005 and held until 31 August 2026 grew to ₹3,00,810, translating into a 17.23% CAGR.
TRI (Total Return Index) assumes that dividends paid by the index constituents are reinvested, in addition to capturing changes in stock prices.
But the outcome changed considerably when the strongest market days were excluded.
| Investment approach | Value of ₹10,000 | CAGR |
| Stayed invested | ₹3,00,810 | 17.23% |
| Missed best 5 days | ₹2,05,241 | 15.15% |
| Missed best 10 days | ₹1,54,804 | 13.65% |
| Missed best 30 days | ₹66,638 | 9.26% |
| Missed best 50 days | ₹33,258 | 5.77% |
*Source: Abakkus Mutual Fund; Investment period: April 2005 to 31 August 2026; Initial investment of ₹10,000 in Nifty Midcap 150 TRI
The difference is striking. Missing just the five best days reduced the final value by nearly ₹95,600 compared with staying invested throughout, while the CAGR fell from 17.23% to 15.15%.
Missing the 50 best days reduced the terminal value to about one-tenth of the fully invested outcome, with the CAGR falling sharply to 5.77% from 17.23%.
Why can getting back in be harder than getting out?
The strongest market days often occur around periods of heightened volatility. An investor who exits after a decline may therefore face a difficult decision: whether to re-enter after the market has already recovered part of its losses.
For an investor, this creates a timing problem. Avoiding a 20% fall may look sensible in isolation, but the long-term outcome also depends on whether the investor participates in the subsequent recovery.
The data illustrates this through the widening gap between the fully invested portfolio and portfolios that missed the best-performing days. For investors, the key takeaway is to have a clear long-term plan and avoid making impulsive exit-and-re-entry decisions during sharp market corrections.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
