Amfi stock reclassification: Largecap cutoff likely to touch Rs 1 trn

The market capitalisation (mcap) cutoff to qualify for mutual funds’ (MFs’) largecap universe is likely to go up for the fifth consecutive time to touch the Rs 1 trillion mark for the first time.

 

A fresh list of largecap, midcap, and smallcap stocks is set to be released by the Association of Mutual Funds in India (Amfi) in the first week of January.

 

A report by Nuvama Alternative and Quantitative Research estimates the cutoff to go up over 18 per cent to Rs 1 trillion in the upcoming reclassification compared to the Rs 84,328 crore threshold during the previous such exercise at the end of June 2024. The cutoff has doubled since July 2023.

 

India now has 100 listed firms valued over Rs 1 trillion, a milestone first reached on July 4. The number had briefly peaked to 107 before dropping to 87 last month.

 

In the case of midcap basket, the mcap threshold may go up to Rs 32,900 crore from Rs 27,560 crore. 

 

Amfi revises the list of largecap, midcap, and smallcap stocks at the start of January and July every year based on the previous six-month performance of stocks. The top 100 companies based on the average mcap in the past six months qualify as largecaps, the next 150 become midcaps, and the rest smallcaps.

 

The sharp surge in mcap thresholds has led to calls for a change in stock classification methodology or raising the number of largecap and midcap stocks. This had led to discussions around changing the classification process, or increasing the number of largecap and midcap stocks. However, the regulator and the industry decided to keep it unchanged for now.

 

The stocks that are primed to move from midcap to largecap list include CG Power, Rail Vikas Nigam, ICICI Prudential Life Insurance, and Indus Towers, among others. Four new listings — Hyundai Motors, Bajaj Housing Finance, NTPC Green, and Swiggy — will also make it to the largecap basket.