Sebi, in a circular, on Friday announced a new set of portfolio allocation rules for multi-cap mutual funds where the market regulator has made it mandatory for multi-cap funds to invest a minimum of 25% of their portfolio each in large and mid-capitalization stocks. and small cap companies. To comply with the new rules, fund managers will need to reduce their large-cap holdings and increase mid-cap and small-cap holdings in their multi-cap systems by January of next year. Analysts expect mid-cap and small-cap stocks to rally around this event.
“We will see a rebound in the mid and small cap space in about a year due to the acceleration of purchases by mutual fund companies to comply with new portfolio allocation rules,” said Sunil Subramaniam, Managing Director of Sundaram Asset Management in a YouTube video. downloaded by AMC.
So which companies will these finance companies buy? Guesses?
Well, Abhimanyu Sofat, head of research at IIFL Securities, believes that mutual fund companies will mostly buy stocks that they are comfortable with. He said: “Multi-cap funds can increase allocation primarily to their existing mid and small cap holdings, further complying with portfolio allocation rules.
Sofat was speaking in a video uploaded to YouTube by IIFL Securities.
Sofat gave the names of a few mid-cap stocks that could see more purchases by mutual fund houses around January of next year. “Among mid-cap stocks, AU Small Finance Bank, Jubilant FoodWorks, SRF ltd, Bharat Electronics, Ramco Cements, Balkrishna Industries, Power Finance Corporation, TVS Motors, Voltas, Crompton Greaves Consumer Electricls and REC are some of the main existing holdings of fund houses that might see further purchases from AMCs, “Sofat said. Due to the increase in purchases of these stocks, a large rally of these mid-cap stocks can be observed.
Among small caps, Sofat believes that there could be a rise in stocks in market capitalization between ₹3000 crore and ₹7,000 crore.