Adani Total, Apollo Hospitals, Chola may join large-cap club
Adani Total Gas, Apollo Hospitals, and Cholamandalam Investment are among the stocks that are likely to get added to the mutual fund (MF) large-cap universe. These changes can be made during the half-yearly review undertaken by MF industry body Association of Mutual Funds in India (Amfi) in the first week of July.
Petronet LNG, PI Industries, and Hindustan Petroleum Corporation (HPCL) may get demoted from the large-cap list to the mid-cap list, according to an analysis done by Sriram Velayudhan, vice-president, IIFL Securities.
Over a dozen stocks will also move from the mid-cap universe to the small-cap universe and vice versa.
In 2017, Sebi came out with norms to define large-, midand small-caps. Under this, the top 100 companies in terms of their total market capitalisation are tagged as large-caps, the next 150 companies fall in the mid-cap segment, and companies beyond the top 250 are all considered to be small-caps.
Amfi is tasked with computing the ranks based on the average market cap every six months. The rejig in July will be based on the January-june 2021 stock price movements.
Equity mutual fund (MF) schemes have to rebalance their holdings based on these changes. Usually, the changes don’t result in a significant churn of holdings like it does in the case of exchangetraded funds (ETFS). Most actively managed schemes have enough leeway to dabble in stocks outside their core mandate.
For instance, a large-cap equity scheme is required to deploy a minimum of 80 per cent of its corpus towards large-cap companies. This gives fund managers enough flexibility to continue to hold onto stocks even if they move out of the large-cap universe. Similarly, mid- and small-cap schemes need to have a minimum investment of 65 per cent in stocks falling in their universe.