 "Large-cap cut-off surpasses Rs 1 trillion as 11 new stocks join the list")
The 100-stock largecap basket of Mutual funds (MFs) has seen a major reshuffle in the latest semi-annual reclassification with seven midcap stocks and four new listings earning the largecap tag.
According to a report from Nuvama Alternative & Quantitative Research, the midcap stocks that have been upgraded include CG Power, Rail Vikas Nigam, ICICI Prudential Life Insurance, Polycab India, Indus Towers, Cummins India, and Info Edge. The new listings are Hyundai Motors, Bajaj Housing Finance, Swiggy, and NTPC Green. The new list will be effective from February 1, 2025.
The Association of Mutual Funds in India (Amfi) revises the largecap and midcap lists every six months. The top 100 stocks with the highest average market capitalisation (mcap) in the previous six months are classified as largecaps. The next 150 stocks become midcaps. The market rally in recent years has led to a sharp rise in the mcap threshold for largecap and midcap baskets.
The largecap cut-off rose 18 per cent to go past Rs 1 trillion for the first time. It was only Rs 49,547 crore in July 2023. The midcap threshold has risen to Rs 33,205 crore compared to Rs 17,385 crore in July 2023. A breakdown of the fresh stock lists shows that largecap stocks now account for 62.1 per cent of the market, slightly down from July's 63.6 per cent.
"Midcaps (101-250) are on the rise, making up 19.6 per cent, up from 18.2 per cent in the July review. Smallcaps (251 and beyond) now represent 18.3 per cent, a modest increase from July’s 18.2 per cent. The market’s growth trajectory continues to shift, making this period a fascinating one for domestic investors," the Nuvama report stated.
The entry of new stocks in the largecap list replaced some of the under-performing stocks from the existing list. These include Adani Total Gas, NHPC, Shree Cements, Bharat Heavy Electronics, Jindal Steel, Mankind Pharma, and Apollo Hospitals, along with four banking stocks — IDBI Bank, Union Bank of India, Canara Bank, and IndusInd Bank. These stocks have moved to the midcap list.
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The list of largecap, midcap and smallcap stocks is crucial for fund managers of market cap-based schemes like largecap, midcap, multicap, smallcap, large and midcap. These scheme categories have strict guidelines around exposure to stocks in each basket.
Apart from those moving out of the largecap bucket, the midcap universe has seen the entry of four smallcaps and five new listings. Smallcap stocks that have been upgraded are GE T&D India, 360 One WAM, Kaynes Technology, and Aditya Birla Fashion.