Cyclicals and digital stocks may dominate upgrades in the upcoming Association of Mutual Funds in India (AMFI) size reclassification exercise, a note from the brokerage firm ICICI Securities said.
The upcoming AMFI reclassification of stocks based on size will take into account average market capitalisation for the January-June 2021 period for cateogerising scrips into large, mid and small caps, the brokerage firm said.
ICICI Securities said overall 20 stocks could be upgraded during the July review—seven from mid to largecap and 13 from small to midcap.
"Out of these 20 stocks, 14 belong to cyclicals (industrials and lenders), while five belong to digital domain (platform, e-commerce or niche digital technology), and one defensive (healthcare)," said ICICI Securities.
The market regulator Securities and Exchange Board of India (SEBI) requires domestic mutual fund schemes to have a clear and well-defined classification of largecap, midcaps and smallcap stocks.
Adani Total Gas, NMDC, Apollo Hospitals, Cholamandalam Investment and Finance and SAIL are the stocks that have a high probability of migrating from mid to large-cap category.
On the other hand, Tata Elxsi, APL Apollo Tubes, Kajaria Ceramics, Bank of Maharashtra and Apollo Tyres are among the stocks that have a high probability of migrating from the small to midcap category.
IRFC and Indigo Paints may be the new entrants to the midcap group. Granules India, Bombay Burmah, AstraZeneca Pharma, Motilal Oswal Financial Services and Godrej Agrovet are among the stocks that have a high probability to move to the small-cap group from the mid-cap one.
The upper limit for qualifying as a midcap stock crosses an all-time high of $5 billion, last seen during May 2018, and is up five times from the Taper Tantrum lows of $1 billion, the brokerage firm said.
"Upper threshold for small-caps at $1.6 billion is still below the level seen in January 2018 level of $1.8 billion," ICICI Sec said.
In January 2021, Yes Bank, Adani Enterprises, PI Industries, Jubilant FoodWorks, Hindustan Aeronautics and Gland Pharma made entry to the large-cap group of stocks, as per the AMFI classification list of large-cap, midcap and smallcap stocks.
NMDC, MRF, United Breweries, Concor, General Insurance Corporation, Bank of Baroda and Max Healthcare Institute were shifted to the mid-cap group from the large-cap group.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.