Categorization of Large Cap, Mid Cap and Small Cap Stocks – The Contrast between AMFI and NSE

SEBI Categorization of Large Cap/Midcap and Smallcap.

SEBI in its circular https://www.amfiindia.com/Themes/Theme1/downloads/1507291273374.pdf has come out with a way of defining large-caps/midcaps/small-caps.

Observations from – Semi-Annual Review – Stock Mcap Classification
(AMFI Release-Jan-19) by Edelweiss

 

Analyse India Observations 

  • There are 1624 companies in the NSE and 4649 companies on BSE as per the data.
  • The cut-off for companies to be a Mid-Cap is 8600 crores. Any company less than that is a Small-cap.
  • There are just 779 companies with an average 6 month market-cap higher than 1000 crores. So roughly around 529 companies in the band of 1000 to 8500 cr market cap.
  • There are approx. 1700 companies with an average market cap of 100 cr.

The Contrast of AMFI/SEBI Categorization with NSE  Indices. 

The categorization is based on 6 months average Full Market Cap.

This is a stark contrast to the fact that all Mutual Funds are benchmarked to indices which have a free float market-cap methodology.

( Free Float Market Cap gives a higher weight to companies with lower promoter shareholding )

Another contrast is SEBI/AMFI wants low churn by Fund Managers and trying to limit the number of schemes etc and want them to be long-term investors but expect them to re-balance every 6 months on basis of price movements.

( Rule – Subsequent to any updation in the list, Mutual Funds would have to rebalance their portfolios (if required) in line with updated list, within a period of one month. )

The categorization of Stocks changes every 6 months and there is no limit to it. So a lot of stocks will keep changing from Large Cap to Midcap or Midcap to Smallcap and vice versa in the categorization.

In contrast, Nifty Index constituents can change every 6 months but have a limitation of only 10% of the constituents to be changed in a year for Nifty. Also replacing stock has to 1.5x free float market cap to the lowest weighted stock. For example, Nifty 500 can make 50 changes in a year and Nifty50 can do 5 changes in a year.

This difference of in categorization will keep leading to a major difference in Midcaps as per AMFI categorization and Midcap/Smallcap as per the NSE Indices.

Funds now have another headache as benchmarks and AMFI classifications do not match.

( An interesting read – http://www.analyseindia.com/midcap-funds-underperformed-in-2017-because-of-vakrangee-limited )

The difference in the categorization of Nifty Indices with AMFI categorization. 

12 Stocks of Nifty Midcap 100 are classified as Small Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

MANAPPURAM Manappuram Finance Ltd.
MGL Mahanagar Gas Ltd.
ENGINERSIN Engineers India Ltd.
VGUARD V-Guard Industries Ltd.
RELCAPITAL Reliance Capital Ltd.
TV18BRDCST TV18 Broadcast Ltd.
PRESTIGE Prestige Estates Projects Ltd.
VAKRANGEE Vakrangee Ltd.
AVANTIFEED Avanti Feeds Ltd.
PCJEWELLER PC Jeweller Ltd.
DBL Dilip Buildcon Ltd.
SPARC Sun Pharma Advanced Research

6 Stocks of Nifty Midcap 100 are classified as Large Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

 

DIVISLAB Divi’s Laboratories Ltd.
UBL United Breweries Ltd.
PAGEIND Page Industries Ltd.
IBVENTURES Indiabulls Ventures Ltd.
BERGEPAINT Berger Paints India Ltd.
LTI Larsen & Toubro Infotech Ltd.

18 Stocks of Nifty Midcap 150 are classified as Small Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

AVANTIFEED Avanti Feeds Ltd.
BLUEDART Blue Dart Express Ltd.
DBL Dilip Buildcon Ltd.
ENGINERSIN Engineers India Ltd.
FINCABLES Finolex Cables Ltd.
GET&D GE T&D India Ltd.
JMFINANCIL JM Financial Ltd.
KRBL KRBL Ltd.
MGL Mahanagar Gas Ltd.
MANAPPURAM Manappuram Finance Ltd.
PCJEWELLER PC Jeweller Ltd.
PRESTIGE Prestige Estates Projects Ltd.
RELCAPITAL Reliance Capital Ltd.
SPARC Sun Pharma Advanced Research
SYMPHONY Symphony Ltd.
TV18BRDCST TV18 Broadcast Ltd.
VGUARD V-Guard Industries Ltd.
VAKRANGEE Vakrangee Ltd.

8 Stocks of Nifty Midcap 150 are classified as Large Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

BAJAJHLDNG Bajaj Holdings & Investment Ltd.
BERGEPAINT Berger Paints India Ltd.
DIVISLAB Divi’s Laboratories Ltd.
GSKCONS GlaxoSmithkline Consumer
IBVENTURES Indiabulls Ventures Ltd.
LTI Larsen & Toubro Infotech Ltd.
PAGEIND Page Industries Ltd.
UBL United Breweries Ltd.

 

10 Stocks of Nifty 100 are classified as Mid Cap by AMFI classification based on SEBI Circular dated Oct 6, 2017

ABB ABB India Ltd.
ACC ACC Ltd.
ABCAPITAL Aditya Birla Capital Ltd.
BEL Bharat Electronics Ltd.
BHEL Bharat Heavy Electricals Ltd.
LICHSGFIN LIC Housing Finance Ltd.
NHPC NHPC Ltd.
OIL Oil India Ltd.
SRTRANSFIN Shriram Transport Finance Co. Ltd.
SUNTV Sun TV Network Ltd.

 

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