July 18, 2018

What ails small- and mid-cap stocks

The promoter of one of Mumbai’s oldest broking houses told BusinessLine that SEBI’s move asking mutual funds (MFs) to restructure schemes for small- and mid-cap stocks is a chief cause for the sell-off in this segment. SEBI directed MFs to cut down the number of schemes and broadly have only large-, small- and mid- schemes in the category and further sub-category.

“SEBI’s criteria for re-categorising stocks baffled the street. The definition was strange and confusing as parameters were vague,” said the broker.

“Over 44 per cent of total MF schemes had to be re-adjusted in three months, which started a wave of sell-off in small- and mid-cap stocks and showed no sign of ebbing till June.”

SEBI defined large-caps as the first 100 stocks by market-cap, mid-cap from 101 to 250, and small-cap (stocks below 251), which it said will be updated half yearly.

Suddenly, the pool became smaller and MFs put curbs on inflows into small- and mid-cap schemes.

Read more at https://www.thehindubusinessline.com/markets/what-ails-small-and-mid-cap-stocks/article24445398.ece

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