In March, during the correction in the market due to the regulatory warnings, mutual funds cautiously raised their holdings by small quantities in midcap and smallcap stocks, a report said.
According to ACE equities data, out of 127 midcap firms, where mutual funds are invested, 69 saw a rise in stakes by mutual funds, while their holding reduced in the remaining 58 stocks.
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The mutual funds invested Rs 100 crore to Rs 865 crore in 19 midcap stocks, while 29 stocks attracted Rs 10-99 crore in March.
Last month, the Chairperson of Securities and Exchange Board of India (SEBI), Madhabi Puri Buch said there are pockets of froth in the small and mid-cap space in the equity markets that has the potential to become a bubble and burst affecting investors.
“It would not be appropriate to allow the bubble to build because they are liable to burst and impact investors adversely,” she had said.
The report highlighted that reacting to the development, the holdings of mutual funds in smallcap segment reduced in 192 firms while increased in 451, while 77 stocks had no change in MF stakes.
Mutual fund investments ranged from Rs 100 crore to Rs 665 crore in 20 smallcaps, while it stood at Rs 10-99 crore in 125 stocks.
The BSE MidCap fell 0.1 per cent and the BSE SmallCap index lost 4.7 per cent in March, driven by a combination of factors such as ED raids on a big market operator and allied entities, Sebi flagging ‘froth’ in the market.
The data highlighted that in the midcap sphere, Samvardhana Motherson International led with MF purchases of Rs 856 crore, followed by Steel Authority of India with around Rs 853 crore, and Canara Bank with Rs 604 crore.
Samvardhana Motherson International saw a significant increase of 7.32 crore shares, SAIL saw MFs increasing shares by 6.35 crore, while Canara Bank recorded purchase of 1.04 crore shares by MFs.
Further, Shriram Finance saw the biggest selling by mutual funds in the midcap space at Rs 514 crore, followed by Lupin and PB Fintech at Rs 515 crore and Rs 469 crore.
Jindal Steel and Power, Cummins India and Tata Communications saw selling by mutual funds between Rs 300 crore and Rs 400 crore.
Further, in the smallcap space, NLC India saw biggest buying interest from MFs after the government diluted its stake through an offer-for-sale.
NLC India bought around 2.92 crore shares worth Rs 665 crore while the other firms like Prestige Estate Projects, Suven Pharmaceuticals and GR Infraprojects saw MFs raising their stakes by Rs 405 crore, Rs 282 crore and Rs 262 crore, respectively.
Bata India was the biggest smallcap stock which saw selling of around Rs 276 crore by MFs, followed by Bharat Dynamics and Hindustan Copper at Rs 193 crore and Rs 178 crore.
