Nykaa, Paytm: Tech, New-Age Firms To Dominate New Entries Into AMFI's Large-Cap Category, Says Edelweiss

Technology and new-age firms that recently went public will rule the upcoming large-cap categorisation of the mutual fund sector, according to Edelweiss Alternative Research.

Zomato Ltd.; Nykaa's parent FSN E-Commerce Ventures Ltd.; Paytm's parent One97 Communications Ltd. and Policybazaar's owner PB Fintech Ltd. are among companies that are expected to enter large-cap category in the semi-annual review by the Association of Mutual Funds in India, according to the research firm.

All four made their market debut in 2021, a record year for the initial public offerings in India. New-age firms rode the record-setting rally for equities and frenzied buying by retail investors.

The official list will be released between Jan. 4 and Jan. 7 with a market value cut-off date of Dec. 31, Edelweiss said. The changes will be valid from Feb. 1.

Here are the potential changes to the AMFI's market-cap categorisation sorted by "high convictions":

IT services firm Mindtree Ltd. and chemicals company SRF Ltd. are expected to lead the list of mid caps graduating to the large-cap category.

Edelweiss sees Yes Bank Ltd. and Honeywell Automation India Ltd. among the stocks that will be relegated from large caps to mid caps.

Billionaire investor Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Co. is expected to enter the mid-cap category.

Happiest Minds Technologies Ltd., Central Bank of India and Gujarat Fluorochemicals Ltd. are likely to be among the companies that will move from small to the mid-cap category.

Jubilant Pharmova Ltd., RBL Bank Ltd. and Amara Raja Batteries Ltd. are likely to be relegated to the small-cap category, among others, according to Edelweiss.