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SEBI’s Norms For Mutual Funds May Boost Mid-Cap Inflows, Says CLSA

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The market regulator’s new rules on equity holdings and stock classification for mutual funds could trigger inflows worth Rs 19,000 crore into mid-cap stocks.

That’s the word from CLSA. The stocks that may get part of the inflows include Godrej Properties Ltd., Crompton Greaves Consumer Electricals Ltd., Astral Poly Technik Ltd., Jubilant Foodworks Ltd. and Arvind Ltd., the brokerage said.

A circular by the Securities and Exchange Board of India not only mandated a minimum allocation to equities for every fund, but also defined large-, mid- and small-cap stocks based on market capitalisation.

Most of the large- and small-cap funds already comply with the regulations, the brokerage wrote. A large part of the buying would be required in mid caps, it said. The actual impact may vary depending upon how fund houses merge schemes to comply with SEBI norms, CLSA said.

The list of the stocks will be updated half-yearly by the Association of Mutual Funds in India and the funds will be given a month to realign their portfolios.

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