Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Indian mutual fund industry has assets of almost INR 5 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap and Small Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks.The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.In the upcoming recategorization in January 2021, we see 6 stocks moved from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 12 stocks are expected to move from the small cap segment to the mid cap segment with the same number moving the other way. There are quite a few IPOs that will join the small cap list, with just 1 joining the large cap list and 1 joining the mid cap list.Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.

The Indian mutual fund industry has assets of almost INR 5 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap and Small Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks.The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.In the upcoming recategorization in January 2021, we see 6 stocks moved from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 12 stocks are expected to move from the small cap segment to the mid cap segment with the same number moving the other way. There are quite a few IPOs that will join the small cap list, with just 1 joining the large cap list and 1 joining the mid cap list.Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.

India: AMFI Stock Categorization Changes to Drive Active Portfolio Churn

Independent Research Analyst

Mamta Verma

DC India Research

DC India Research LLP (DCIR) is based out of Mumbai, India.

We specialize in providing customized, independent research across listed and unlisted companies in India across equities and credit including sectoral research. Our customers include India focussed PE funds, special situation funds, domestic AMCs, Wealth Advisory& PMS firms, Rating Agencies & Investment Advisors. 

The DCIR board consists of prominent names from the industry as well as CIO’s of Hedge funds.

Equity Bottom-Up

In this note we provide a quick-wrap of the q3-FY18 and 9m-FY18 performance of the listed companies in the Indian Bearings sector. We cover the following 4 listed players - <a href="https://www.smartkarma.com/entities/6434" target="_blank" data-smartkarma-citation="entities:6434:1">Schaeffler India (SCHFL IN)</a>, <a href="https://www.smartkarma.com/entities/19719" target="_blank" data-smartkarma-citation="entities:19719:1">Nrb Bearings Ltd (NRBBR IN)</a>, <a href="https://www.smartkarma.com/entities/4984" target="_blank" data-smartkarma-citation="entities:4984:1">Skf India Ltd (SKF IN)</a>, <a href="https://www.smartkarma.com/entities/5540" target="_blank" data-smartkarma-citation="entities:5540:1">Timken India Ltd (TMKN IN)</a>Note - Schaeffler India announced q1-CY18 results yesterday and have an earnings call schedule for today morning. We will be providing a result update shortly.This sector capsule will also be updated for q4-FY18…

In this note we provide a quick-wrap of the q3-FY18 and 9m-FY18 performance of the listed companies in the Indian Bearings sector. We cover the following 4 listed players - Schaeffler India (SCHFL IN), Nrb Bearings Ltd (NRBBR IN), Skf India Ltd (SKF IN), Timken India Ltd (TMKN IN)Note - Schaeffler India announced q1-CY18 results yesterday and have an earnings call schedule for today morning. We will be providing a result update shortly.This sector capsule will also be updated for q4-FY18…

Sector Capsule - Indian Bearings Industry

India

SKF India Ltd. manufactures a wide range of ball and roller bearings, such as deep groove, taper roller and other types.  Bearings are used by a number of industries, including the automotive, electrical, power generation, cement, steel, petrochemical and textile industries.

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SKF India Ltd (SKF IN)

India: AMFI Stock Categorization Changes to Drive Active Portfolio Churn

The reclassification of stocks to large, mid and small cap will set off a churn in mutual fund portfolios where historically stocks migrating...

Brian Freitas

Sector Capsule - Indian Bearings Industry

In this note we provide a quick-wrap of the q3-FY18 and 9m-FY18 performance of the listed companies in the Indian Bearings sector. We cover the...

DC India Research

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