HDFC Securities: Small And Mid-Caps - Wind In Their Sails

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Report.Securities and Exchange Board of India’s circular mandating multi-cap funds to allocate at least 25% of their assets under management in mid and small-caps each by early February 2021 has come as a surprise, given the large AUMs currently under the multi-cap category.We believe some of the large multi-cap fund schemes might opt to reclassify into (or merge with the existing) ‘large and mid-caps’ category, given the difficulty of managing sizeable AUMs with a high proportion of relatively less liquid Indian mid and small-caps.However, this mandate would still lead to forced inflows into mid and small-caps over the next four months, especially smallcaps, given the sizeable gap between existing and proposed holdings across most schemes.As per current holdings and no scheme reclassification, this shift would lead to an outflow of approximately Rs 350 billion from large caps (top 100 stocks by market capitalisation) and inflows of approximately Rs 130 billion into mid-caps (next 150 stocks), and approximately Rs 280 billion into small-caps (beyond the top 250 stocks).As per our analysis, these inflows would amount to approximately 1.2% of total free-float of mid-caps and a whopping approximately 7% for small-caps..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

HDFC Securities: Small And Mid-Caps - Wind In Their Sails

SEBI’s mandate for multi-cap mutual funds would lead to forced inflows into mid- and small-caps over the next four months.

Choose a plan