Six mid-caps may turn large-caps in Amfi review
Earlier in 2017, market regulator Securities and Exchange Board of India had defined large, mid and smallcap companies to ensure uniformity in the investment universe for equity mutual fund schemes
PremiumMUMBAI: As Indian equities continue to rally amid disruptions and concerns about the second wave of covid-19 infections, six mid-cap stocks are expected to be reclassified as large caps by Association of Mutual Funds in India (Amfi) in its semi annual review. The mutual fund industry body will release the list of stocks that are reclassified during 5-7 July while the fresh list will be effective from August 2021 to January 2022.
According to estimates made by Abhilash Pagaria, analyst, Edelweiss Alternative Research, six midcap stocks that are likely to be reclassified as large caps are Adani Gas, Apollo Hospitals, Cholamandalam Investment and Finance Company Limited, NMDC, Honeywell Automation and Bank of Baroda.
Shares of Adani Total Gas have soared 245% in this year so far after a super 130% rise in 2020. NMDC and Cholamandalam gained 42 and 59% respectively this year while Apollo Hospitals, Honeywell Automation and Bank of Baroda jumped 13-32% so far this year.
“These are our initial predictions, and we will release our final names in last week of June. Stocks in the list are sorted by highest conviction," said Pagaria.
Conversely, six large-cap stocks are likely to be reclassified as midcaps. Those are Abbott India, Hindustan Aeronautics (HAL), Alkem Laboratories, Hindustan Petroleum Corp Ltd (HPCL), PI Industries and Petronet. HPCL has jumped 32% in this year so far following 18% slump in 2020. Abbott India, PI Industries and HAL have gained 2-21% from January till date. Petronet LNG has fallen 5% in this year so far.
As per estimates, around 15 mid-cap stocks may be reclassified as smallcaps. These include Granules India, AstraZeneca Pharma, Central Bank of India, IIFL Wealth Management, Motilal Oswal Financial Services and Metropolis Healthcare among others. Similarly, 12 smallcap stocks are expected to be reclassified as midcaps.
Three newly listed stocks IRFC, Macrotech Developers, and Indigo Paints are expected to reclassified as midcaps.
Earlier in 2017, market regulator Securities and Exchange Board of India (Sebi) had defined large, mid and smallcap companies to ensure uniformity in the investment universe for equity mutual fund schemes. It had also said that AMFI will semi-annually prepare and review the list of stocks according to the criteria specified under the circular.
According to Sebi’s definition, with a six-month average market capitalisation, first 100 stocks are categorised as large cap, next 250 as midcap and rest as smallcap.
Market valuation of all listed firms on the BSE touched $3 trillion for the first time on Friday, led by gains in smaller stocks in mid and smallcap indices. Even as the aggregate market value has hit a new record, benchmark indices, which represent the top stocks by market cap, are still below their all-time highs hit in February this year.
In rupee terms, India’s current value is pegged at around ₹218.05 trillion, bolstering investors wealth by ₹30.01 trillion or $42.01 billion in this year despite covid led worries and subsequent localised lockdowns hitting sentiments. In May itself, market cap of BSE companies swelled by about ₹11.03 trillion or $19.62 billion. From their 52-week lows, BSE MidCap has advanced 92%, BSE Smallcap 121% and BSE 500 has risen 75%.
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