Mutual funds have been lapping up mid- and small-cap stocks due to the steady inflow into these funds in recent times. While mid-cap mutual fund schemes have seen an inflow of ₹3,335 crore in the December quarter, it was ₹2,183 crore in small-cap funds.
Interestingly, much of the inflow came in the past two months with mid-cap schemes registering investments of ₹1,280 crore and ₹1,679 crore in November and December, respectively, while small-cap schemes attracted ₹782 crore and ₹1,053 crore.
Leading mutual funds such as SBI MF, HDFC MF, IDBI MF and Quant MF have increased their allocation to small-cap funds. Companies that have attracted MF investments in the December quarter include Mitsu Chem Plast, Arihant Superstructure, Centum Electronic, Dhanvarsha Finvest, Disa India, Rama Steel Tunes, Taj GVK Hotels and Resorts, V2 Retail and Vishwaraj Sugar.
IDBI MF had bought over 2.31 lakh shares in Mitsu Chem Plast and the company’s shares moved up steadily from ₹246 in October to ₹329 on Wednesday. Being one of the major beneficiaries of the turnaround in the economy, Mitsu Chem Plast, a leading manufacturer of plastic blow moulded and injection moulded polycontainers, has attracted investor interest all around.
Similarly, shares of Bengaluru-based Centum Electronic has moved from ₹538 in October to ₹603 on Wednesday. The company is a leading industry partner for DRDO labs, Defence PSUs and the Indian Space Research Organisation, having delivered mission-critical electronics on major missile, radar, electronic warfare and satellite applications.
Avinash Gorakshakar, Head of Research, ProfitMart Securities, said the rebound in the economy will push the revenue of small- and micro-cap companies three to five times, and the benefit accruing to them will be much higher than in large-cap stocks.