Correction forced mid and smallcap funds to rejig top stock holdings in February
In February, new entries in the mid and small-cap space included Hexaware Technologies Ltd., Ajax Engineering Ltd., Quality Power Electrical Equipments Ltd., Vasa Denticity Ltd., Kingfa Science & Technology (India) Ltd., Saksoft Ltd., Gensol Engineering Ltd., Som Distilleries & Breweries Ltd., Cantabil Retail India Ltd., Jyoti Structures Ltd., Tanfac Industries Ltd., Ashapura Minechem Ltd., and Magellanic Cloud Ltd.
The ongoing market correction and volatility in share prices have forced mutual funds to make significant changes to their portfolio in February, especially in the mid and smallcap category, an anslysis from Prime Database has shown.
Mutual funds increased their stake in 453 stocks in the smallcap space in February, while decreasing holding in around 300 stocks. In the midcap universe, more than 90 stocks saw an increase in the stake held by mutual funds while nearly 60 saw funds trim their holdings.
In terms of stocks, Max Healthcare, AU Small Finance Bank, Apollo Hospitals, Prestige Estates, Hindustan Petroleum Corporation (HPCL), Persistent Systems, IndusInd Bank, Coromandel International, Voltas, Muthoot Finance, United Breweries, Crompton Greaves Consumer Electricals, Devyani International, Jubilant FoodWorks, and Tanla Platforms featured among top changes in stake held by mutual funds.
Midcap Churn
According to Prime Database, in the midcap segment, mutual funds increased their stake in around 93 stocks in February, with mutual funds increasing their holding in Max Healthcare from 12.49% to 13.73%, with net buying of Rs 1,257.64 crore.
The second-highest increase was in AU Small Finance Bank where the stake rose from 17.76% to 19.89%, with holdings increasing from 132.17 million shares to 148.02 million shares. Apollo Hospitals saw a net buying of Rs 1,396.55 crore with the stake rising from 13.28% in January to 14.80% in February, and the number of shares increasing from 19.09 million to 21.27 million. Other gainers included Prestige Estates and Hindustan Petroleum Corporation (HPCL).
On the other hand, mutual funds reduced holdings in 57 stocks. Persistent Systems saw the most stake sale by mutual funds, with their holdings dropping from 21.77% to 21.50%, reducing its value by Rs 2,696.60 crore.
IndusInd Bank saw its stake decline from 28.90% to 26.81%. Coromandel International saw its stake drop from 16.44% to 15.51%. Among consumer discretionary stocks, Voltas saw its stake cut from 21.28% to 19.87%. Other stocks that saw selling included Muthoot Finance Ltd. and United Breweries Ltd.
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Smallcap Portfolio Change
In the smallcap space, mutual funds increased their stake in 453 stocks. The highest increase came in the consumer discretionary sector, where additional stakes were picked up in 112 stocks, followed by Healthcare (64) and Commodities (56).
Crompton Greaves Consumer witnessed the highest increase in net buying of Rs 548.91 crore. The company’s stakeholding rose from 43.81% to 46.33%. Another major gainer was Devyani International with a net buying of around Rs 358.29 crore. Mutual fund stake jumped from 35.08% to 45.39%. The third-largest buying was in the case of Eris Lifesciences as shareholding increased from 9.10% to 10.23%. Other stocks that saw buying included Jubilant FoodWorks and Tanla Platforms.
On the other hand, the small-cap segment saw mutual funds decrease their stake in around 300 stocks. The largest decrease in holdings occurred in the industrial sector, where stakes were sold in approximately 68 stocks, followed by Financial Services (37) and Commodities.
City Union Bank witnessed the highest drop in value, with holdings decreasing from 217.30 million shares in January 2025 to 203.90 million shares in February 2025. This led to a reduction in its stake from 29.33% to 27.52%, resulting in a decline in holding value by Rs 761.28 crore. Central Depository Services (India) Ltd. also saw a decline, as mutual funds trimmed their stake from 8.60% in January to 7.74% in February, with shares held dropping from 17.97 million to 16.17 million. This led to a holding value decline of Rs 562.10 crore. Financial services company, Can Fin Homes Ltd., saw a drop in stake from 17.93% to 14.91%, as mutual funds reduced their holdings from 23.87 million shares to 19.85 million shares.
New entrants and exits
In February 2025, new entries in the mid and smallcap space included Hexaware Technologies, Ajax Engineering, Quality Power Electrical Equipments, Vasa Denticity, Kingfa Science & Technology, Saksoft, Gensol Engineering, Som Distilleries & Breweries, Cantabil Retail, Jyoti Structures, Tanfac Industries, Ashapura Minechem and Magellanic Cloud.
On the other hand, complete exits were seen in smallcap stocks like Websol Energy, Jagsonpal Pharma, Jash Engineering, KCP, Jubilant Agri & Consumer, Pix Transmissions and Waaree Renewable.
Latest AMFI numbers also showed a decline in net equity inflow into mutual funds for February, with mid and smallcap fund inflows dropping the most during the month.
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