The Association of Mutual Funds of India (AMFI) classifies companies based on their market capitalization. Largecap companies are ranked 1-100, midcaps are ranked 101-250, and smallcaps are ranked 251 and beyond.
According to Nuvama Institutional Equities, Hero MotoCorp, Zydus Lifesciences, JSW Energy, NHPC, Bharat Heavy Electricals Ltd (BHEL), Samvardhana Motherson International, and Bosch might soon be upgraded to the large cap category.
Conversely, some stocks might move from large cap to midcap. These include Berger Paints, SBI Cards, Marico, SRF, ICICI Lombard General Insurance, ICICI Prudential Life Insurance, and Polycab India.
Several stocks might be upgraded from smallcap to midcap. These include HUDCO, IRB Infrastructure Developers, Bharat Dynamics, MRPL, BSE, Global Health, Hitachi Energy, NLC India, Cochin Shipyard, Tata Investment Corporation, National Aluminium, Hindustan Copper, Motilal Oswal Financial Services, ITI, Godrej Industries, Apar Industries, and Blue Star. Bharti Hexacom and Go Digit General Insurance might also join the midcap category.
On the flip side, some stocks might be downgraded from midcap to smallcap. These include Zee Entertainment Enterprises (ZEEL), Piramal Enterprises, IIFL Finance, Devyani International, and The Ramco Cements. Other potential downgrades include Relaxo Footwear, CreditAccess Grameen, Kansai Nerolac, Hatsun Agro Product, Sundram Fasteners, SKF India, Timken India, Vedant Fashions, Grindwell Norton, Bayer Cropscience, Narayana Hrudayalaya, Sun TV Network, Tata Chemicals, and KPR Mill.
The cut-off period for these changes is from January 1, 2024, to June 30, 2024, with the announcement expected in the first week of July. The new classifications will take effect from August 1, 2024.
Nuvama Equities noted that these changes in classification do not directly lead to new inflows or outflows of funds. However, active mutual fund managers monitor these lists when making decisions about buying or adjusting their positions in different stocks.
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