The Securities and Exchange Board of India's (Sebi) has created a chaos at the D-Street after all institutional investors were left shocked with new guidelines for the multi-cap funds.
Undoubtedly, this would be a big game-changer for the Indian markets. Expect mid-caps and small-caps to deliver significant returns in the next 4-6 months, said Centrum in its report.
With funds changing their portfolio sizes and allocation now, this new rule will bring upon the much-needed impetus to mid-caps and small-caps, added the brokerage.
Centrum listed out 5 mid-caps and 10 small-caps for the investors to look up to. Among midcaps, the brokerage suggested M&M Financial, PI Industries, Gujarat Gas, Sundaram Finance and Mphasis. All these stocks are currently trading at attractive valuations with strong upside of up to 26 percent.
Size of average AUM in multi-cap funds as on August 31 was Rs 1.46 lakh crore. "As per our calculations, there will be an outflow of Rs 34,000 crore in the large caps. On the other hand, the mid-caps and small-caps will see influx of capital of Rs 13,000 crore and Rs 28,000 crore respectively," explained the brokerage while recommending top stocks for investment.
The domestic brokerage listed out small-cap ideas too, including PNC InfraTech, Dhanuka Agritech, Orient Cement, FDC, Birlasoft, Ujjivan Small Finance Bank, Cera Sanitaryware, Bajaj Consumer, CanFin Homes and VST Industries.
Small-cap stocks could deliver 10-50 percent of upside. Most of the recommended stocks from the list have outperformed the Nifty Smallcap 100 index this year. All these stocks are available at undemanding valuations, the brokerage added.
