Micro Marvels: Smallcaps stocks primed for Rs 20,000 cr capital club

Measured against 2018 baseline, mcap of largest smallcap stock has surged 2.5x

The upper market capitalisation (mcap) threshold for midcap and smallcap stocks in the mutual fund (MF) industry’s revised list of stocks, to be announced early next month, is set to see the second-highest yearly rise in the past five years.

The list was first announced in 2018, and it has been revised every six months since then.

According to estimates released by Nuvama Alternative & Quantitative Research, the upper threshold for the midcap and smallcap universes could come in at Rs 66,700 crore and Rs 21,900 crore in the next list. The figures are 37 per cent and 25 per cent higher compared to the upper thresholds seen at the start of 2023.

In 2021, the growth was even higher at 93 per cent and 68 per cent, respectively.

Smallcap and midcap stocks have seen a sharp rally in 2023, resulting in strong growth in their mcap.

The National Stock Exchange Nifty Smallcap 100 Index is up 51 per cent in 2023 so far. The Nifty Midcap 100 has jumped 42 per cent.

Compared to the 2018 list, the mcap of the largest smallcap stock has gone up 2.5 times (taking the latest estimates into account).

In 2018, the largest stock in the MF’s midcap universe had an mcap of Rs 29,255 crore, while the biggest smallcap company was valued at Rs 8,580 crore.

The Association of Mutual Funds in India does this exercise every six months, with a revised list coming out every January and July.

Taking the average mcap of the previous six months into account, the top 100 companies are classified as largecaps, the next 150 as midcaps, and the rest as smallcaps.