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Anand Rathi Report
The Securities Exchange Board of India has asked Indian mutual funds to invest of the asset under management of multi-cap equity schemes 25% each in mid- and small-cap companies.
At present, the shares of mid- and small-cap companies are much lower.
Consequently, the need would arise for a major shift by various mutual fund schemes in their allocation to mid- and small-cap companies.
Mutual Funds, however, may represent to SEBI regarding changes in the directions and take other measures such as re-classification, amalgamation of schemes, etc.
This might result in lower allocation to mid-/small-cap companies than what has been envisaged in (figs 1 and 2).
That said, the emphasis of SEBI to direct mutual funds to conform to the nature of the schemes and reduce concentration of investing in larger market-cap companies is clear.
We, therefore, would expect some shift by the MFs from large to mid-/small-cap companies.
In view of this, the report provides our preferred mid- and smallcap names across sectors.
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