Delta Corp, South Indian Bank, Balrampur Chini among smallcap shares that saw MF selling in Feb

Smallcap stocks such as Team Lease Services Ltd, South Indian Bank Ltd, Delta Corp Ltd, Medplus Health and India Cements saw trimming of mutual fund stakes in February. Park Hotels, Juniper Hotels, Lumax Auto, Metropolis Health, Orchid Pharma and GPT Healthcare were some of the smallcap shares seeing MF buying in the month gone by.

The BSE smallcap index hit an all-time high of 46,821.39 on February 7, but has fallen 8.52 per cent since then, amid concerns over valuations. Sebi chief also recently warned of froth in smallcap and midcap stocks.

"Excessive liquidity drove up midcap and smallcap stock prices, often exceeding their justified values based on earnings. The surge in funds flowing into these segments compelled fund managers to invest, further inflating valuations. Authorities have acknowledged the situation and proposed potential regulations. Given the historical volatility of small and midcap stocks, it's crucial for investors to exercise caution in allocating funds, whether directly in stocks or through mutual fund SIPs," said Gaurang Shah, Senior Vice President, Geojit Financial Services.

Data showed Team Lease saw Rs 190 crore in MF outflows, as they sell 6 lakh Team Lease shares in February. MFs together now hold 48 lakh Team Lease shares against 54 lakh shares in January. In the case of South Indian Bank, mutual funds sold Rs 180 crore worth shares. They cut their holding by 5.64 crore shares to 3.25 crore shares in February from 8.89 crore shares in January. Delta Corp saw Rs 160 crore selling, as MFs sold 1.16 crore Delta Corp shares in the month gone by.

India Cements, Vijaya Diagnostic and Utkarsh Small Finance Bank saw Rs 100-110 crore worth MF selling. Balrampur Chini Mills, MTAR Tech, Electronics Mart, Kesoram Industries, NRB Bearings, Quess Corp and VRL Logistics were some of the smallcap stocks seeing MF selling in February.

Among buys were debutants Park Hotels (Rs 580 crore) and Juniper Hotels (Rs 550 crore). CMS Info Systems saw Rs 490 crore worth MF buying for the month. Paradeep Phosphates, Lumax Auto Tech, Metropolis Health, Orchid Pharma, GPT Healthcare and Jana Small Finance Bank saw over Rs 100 crore worth MF selling.

"Investors should be prepared for the inherent volatility in small, mid, and microcap stocks, as corrective phases have occurred before. Regulatory steps aim to safeguard the interests of small retail investors," Shah said.