Impact of SEBI Announcement on Infra Stocks - Angel Broking

Mr. Keshav Lahoti - Associate Equity Analyst, Angel Broking Ltd

"Last friday, SEBI in a circular announced a new set of rules for portfolio allocation for multicap funds. According to new rules, it is compulsory for multicap funds to invest at least 25% of their portfolio in each large cap, mid cap and small cap stocks each by Jan'21. Currently most of the multi cap funds clearly have large cap bias. Most of the funds used to invest ~70% in large cap, ~15 in midcap and single digit of their portfolio in small cap. Due to these new rules, money will flow from large cap stock to mid cap and small cap stocks. Today due to this new rule announced by SEBI we saw a rally in mid cap and small cap infrastructure stocks. Stocks such as KNR Constructions and PNC Infratech were up by 6.22% and 4.95% respectively, whereas largecap L&T was down by 1.67% . Rally was seen in quality infrastructure stocks with good return ratios, strong balance sheets and robust order books. We believe to align with new portfolio allocation norms, funds will mostly increase their holding in existing midcap and smallcap portfolio stocks."

Source : Equity Bulls

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