Money Spinning Mid Caps?
Outlook Money|December 2020
With stringent regulatory compliances, large companies are likely to grow and smaller ones may get wiped out, but mid-sized ones to offer much hope, says Dhiraj Relli, Managing Directors, HDFC Securities, during an interview with Yagnesh Kansara and Debjoy Sengupta. Edited excerpts.
Yagnesh Kansara and Debjoy Sengupta
Money Spinning Mid Caps?

Is this rally in benchmark indices expected to spill over to mid and small cap stocks? What is your take?

Mid and small-cap stock prices plummeted post-2017 following a Sebi circular on categorisation and rationalisation of mutual fund schemes. Many of these companies came under pressure due to disruption, liquidity crunch, and technology changes. Promoters’ unwilling or unable to change with time saw their stocks fall off investors’ favor.

However, their stock prices started rising over a few weeks recently due to encouraging secondquarter results and hope among investors that Sebi’s circular will lead to money flowing into small and midcap funds. However, the latest option of converting multi-cap schemes to flexi-cap schemes could take away a large part of that trigger.

Wealth is created when a smallcap entity turns into a mid-cap company and later a large-cap enterprise. These stocks will continue to be monitored by analysts and investors. Despite a broad universe of listed stocks, only a few hundred of them will be actively tracked from this perspective.

Why is the stock market rally in India limited to a handful of stocks?

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