Large-cap MF cutoff to go beyond ₹80,000 crores.

Companies worth up to Rs 80,000 crore in market capitalisation are not expected to be included in the large-cap mutual fund category during the June-end reclassification due to the widespread increase in stock prices over the past six months.

The M-cap cutoff to enter the large-cap list is expected to be around Rs 83,000 crore, as compared to Rs 67,024 crore last year.

There has been a significant increase in the cutoff point following the outbreak of the Covid-19 pandemic. From July to December 2019, the large-cap limit was set at Rs 27,454 crore.

The significant increase in market capitalization limit has resulted in revising the stock classification criteria or by adding more large-cap and midcap stocks. The mutual fund industry has proposed adjustments to the procedure during talks with the Securities and Exchange Board of India (Sebi).

The Association of Mutual Funds in India (AMFI) updates the large-cap, midcap, and small-cap stocks list in January and July annually, depending on the stocks' performance in the past six months. 

Since AMFI bases its list preparation on the average M-cap from the past six months, the cutoffs are expected to remain in line with expectations, barring any sudden market shifts in the next 2 weeks.

In the upcoming reclassification, 7 modifications are anticipated for the large-cap investment universe. 

As per a report from IIFL Securities, midcap stocks including Hero MotoCorp, Zydus Lifesciences, JSW Energy, NHPC, Bharat Heavy Electricals, Bosch etc, are expected to receive upgrades. 

The companies expected to move out include ICICI Prudential Life Insurance, ICICI Lombard General Insurance, Polycab India, SRF, Marico, SBI Cards, and Berger Paints India.