Sebi queers the pitch for fund managers with latest multi-cap circular

The recent circular follows the 'true-to-label' concept, but large funds in the multi-cap category may be forced to merge in the absence of sufficient small-cap options

The Securities and Exchange Board of India’s (Sebi’s) latest circular on the Rs 1.5 trillion multi-cap fund category is likely to lead to another churn in the stock market. It may give a boost to mid- and small-cap stocks but fund managers will be forced to prune their holdings in large-cap stocks. The deadline for compliance with the new guidelines — a minimum of 25 per cent each in large-cap, mid-cap and small-cap — is January 31, 2021.

The move, according to industry experts, means around Rs 35,000 crore each will have to be allocated to mid- and small-cap stocks