Jindal Steel, PNB to migrate to MF large-cap basket: Analyst report

MF industry's stock reclassification to also see entry of Canara Bank and IDBI Bank into largecap space

Public sector banks Punjab National Bank (PNB) and Canara Bank, along with LIC-owned IDBI Bank , are set for an upgrade from mid-cap to large-cap in the lastest stock categorisation list to be issued by the Association of Mutual Funds in India (Amfi) this week, according to report by Nuvama Institutional Equities.

Amfi takes the average market capitalisation (m-cap) for the past six months to arrive at the fresh list at the end of every six-month period (January to June and July to December). Top 100 stocks by average m-cap qualify for the largecap status and the next 150 for midcap.

Though the shares of PNB and Canara Bank ended the first half of 2023 in the negative territory, on an average m-cap basis they are in a position to replace some of the poor performers in the present largecap list.

The report sees Nykaa, JSW Energy, Tata Elxsi and few other stocks getting downgraded to the midcap status.

Among the smallcap stocks, those set for a promotion to midcap universe are Punjab & Sind Bank, Carborundum Universal, Bank of Maharashtra, among others. Their inclusion will mean that some of the midcap companies like Piramal Pharma, Tata Teleservice, Fine Organic, Nippon Life and Trent will move to the smallcap universe.

The report noted that if Amfi pre-emptively takes the HDFC-HDFC Bank merger into consideration, then Trent could be saved from migrating to the mid-cap from large-cap list. The merger record date is July 13.

 “In the past we have seen Amfi making changes with a lag but with HDFC twin being the biggest merger they should ideally be considering it in advance," the report said.