Adani Total Gas, NMDC, Bank of Baroda, Honeywell Automation, Apollo Hospitals and Cholamandalam Investment and Finance Company are high possible candidates to enter the large-cap category in the forthcoming AMFI reclassification, said brokerages Edelweiss Alternative Research and ICICI Securities (I-Sec).
Besides them, I-Sec also expects SAIL to feature in the large-cap group, thanks to the strong share price gains in the first half of 2021.
According to ICICI Securities, cyclicals and digital stocks will dominate the upgrade list: Overall 20 stocks could potentially get upgrades (7 from mid to large, and 13 from small to mid). Of the 20 stocks, 14 belong to cyclicals (industrials & lenders) while 5 belong to digital domain (platform, e-commerce or niche digital technology), and one defensive (healthcare), said I- Sec.
Large-cap to mid-cap
As per SEBI directive, MF schemes have to be strictly categorised into large cap, mid cap and small cap stocks. Accordingly, the upcoming AMFI reclassification of stocks based on size will take into account average market capitalisation for the period Jan-Jun’21 for reclassifying stocks into large, mid and small caps. Both ICICI Securities and Edelweiss expect Indraprastha Gas, PI Industries, Petronet LNG, HPCL, Alkem Lab and Abbott India to migrate from large-cap to mid-cap. Besides, Hindustan Aeronautics will also move to mid-cap, according to I-Sec study.
Among the recently listed, IRFC and Indigo Paints are likely to enter mid-cap space the brokerages. I-Sec expects, 13 stocks to migrate from small- to mid-cap.
Mid-cap threshold at $5b
Upper limit for qualifying as a midcap stock crosses an all-time high of $5 billion last seen during May’18 and is up 5 times from the Taper Tantrum lows of $1 billion, said I-Sec. However, upper threshold for small caps at $1.6 billion, is still below the level seen in January 2018 level of $1.8 billion, it added.
AMFI will release the list in July first week that has to be implemented by mutual funds from between August 21 and January 22.