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Despite the threat of Omicron looming large, some pharma companies such as Aurobindo Pharma, Lupin and Biocon are likely to move out of large-cap to mid-cap.
According an ICICI Securities research, bi-annual reclassification of stocks based on their market capitalisation by the Association of Mutual Funds in India, will see some of the major pharma companies and bank stocks being downgraded from large- to mid-cap.
Interestingly, new age companies such as Zomato, FSN e-Commerce (Nykaa), One 97 Communications (Paytm) and PB Fintech (Policy Bazaar) will make their entry into the large-cap category.
Among banks, Bank of Baroda, Punjab National Bank and YES Bank may be downgraded to mid-cap while Cholamandalam Investment, P&G Hygiene, NMDC, Colgate-Palmoliv and Honeywell Auto Industrials may also be moved out of large-cap, according to the study.
Mid, small-cap basket widens
AMFI classifies stocks into large-, mid- and small-caps based on their market capitalisation every six months. Mutual funds use them to deploy funds as per scheme categorisation. The January list will consider stock price movement between July and December. Market depth in terms of capitalisation threshold of mid- and small-caps has increased to a new high as foreign portfolio investors search for investment opportunities other than top companies due to their run-away valuations.
The upper threshold for market capitalisation for small-cap companies breached February 2018’s high of $2 billion while for mid-cap stocks, it touched $6.3 billion, said the report.
The small-cap 100 and mid-cap 100 indices on the NSE have risen by 14 per cent since July, compared to an increase of 10 per cent in the Nifty 50.
Some stocks that will be upgraded from mid- to large-cap are Mindtree Technology, SRF Chemical, IRCTC, Tata Power, Mphasis Technology and Godrej Property.
Stocks which will see downgrade to small-cap from mid-cap include Alembic Pharma, Manappuram Finance, Glenmark Pharma, Exide Industries, Blue Dart Express, Wabco India, Apollo Tyres, Bank of Maharashtra, Zydus Wellness, Castrol India, Affle India, Suven Pharma, Amara Raja Battery, City Union Bank, RBL Bank, Indigo Paints, Vaibhav Global, Dhani Services and Jubilant Pharma.
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