AMFI has released the list of market capitalisation classification for categorising stocks into large, mid and small caps based on the six months average market capitalisation. Following, it brokerages have come up with a report on the current positioning of the stocks across the different market capitalisation oriented schemes vis-à-vis the weights in the key benchmarks.
IIFL Securities, however, noted that the re-positioning will be purely discretion based.
Among the midcap stocks moving to largecap list included Varun Beverages, ABB India, Page Industries, Tata Elxsi, Bosch, Trent and PI Industries. Stocks downgraded from largecap to midcap category included Muthoot Finance, One 97 Communications (Paytm), Bandhan Bank, Mphasis, Gland Pharma and Piramal Enterprises.
Smallcap stocks such as Timken India, Metro Brands, Blue Dart, Fine Organics Industries, UCO Bank, ZF Commercial Vehicle Control Systems, Apollo Tyres and KPIT Technologies have been moved to the midcap category.
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Tanla Platforms, IEX, Godrej Industries, ICICI Securities and Aavas Financiers were among a number of midcap stocks that were moved to smallcap category.
The market cap cut off for the large cap stood at Rs 48,900 crore; for the midcap category, the cut off came in at Rs 16,800 crore Of the total market capitalisation, large cap stocks, the top 100, attributed 69.4 per cent against 69.2 per cent in the July review.
"Mid cap (101-250) attribute 16 per cent vs 16.5 per cent (July Review), Small cap (251 and beyond) attribute 14.6 per cent vs 14.3 epr cent (July Review). All the fresh listings have debuted under small cap category. The demerged entity Piramal Pharma made its entry in midcap categorisation," Nuvama Institutional Equities said.
The classification will be the market cap benchmark for H1CY23. Equity oriented schemes focused on market cap classification will have to re-align the schemes within the next one month, the IIFL Securities noted.
As per the Sebi circular in October 2017, the listed stocks must be strictly categorised into baskets with a well-defined classification of large cap, midcap and small cap stocks. This, Nuvama Institutional Equities noted, was to ensure uniformity in respect of the investment universe for equity mutual fund schemes. Accordingly, AMFI in consultation with Sebi and stock exchanges, prepares the list of stocks with categorisation based on the market capitalisation provided by BSE, NSE and MSEI.
The re-categorisation does not necessarily leads to fresh inflows or outflows. An active equity fund manager may choose to add or remove or increase or reduce weightings on stocks from their respective portfolios, depending upon their fundamental rationale, Nuvama noted.
Nuvama said that the upward re-categorisation of stocks helps, but not necessarily immediately in term of flows.
"As the stocks move up from lower categorization to higher (say small-cap to mid-cap and midcap to large-cap), it increases their visibility. Fund managers typically further analyze such stocks and add them as per their rationale while complying with the scheme mandate," it noted.
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