Street signs: Market to see churn by equity funds

For the first time, the Securities and Exchange Board of India (Sebi) has defined large-caps as the top 100 companies in terms of capitalisation, mid-caps as the top 101 to 250 companies, and the rest being small-caps. The move is likely to see a huge churn in portfolios by equity mutual funds (MFs), adding to market volatility. Until now, MFs followed their own definitions. “With the regulator clearly categorising stocks, several stocks in large-cap or mid-cap portfolios would become ineligible after the six-month periodic reviews. This will warrant a lot of buying and selling by funds,” said an industry player.