Digital, Cyclical Stocks to Dominate in Next AMFI Stock Reclassification

The upcoming reclassification of stocks on the basis of size by AMFI is likely to be dominated by the digital and cyclical stocks, according to a report by ICICI Securities.

The reclassification will take into account the average market capitalisation for the period January-June 2021 for reclassifying stocks into large, mid, and small caps.

ICICI Securities, based on the data available from January till now and assuming prices will not deviate a lot from current levels during June, noted that 20 stocks could potentially get upgrades, including seven stocks moving from mid to large-cap and 13 from small to mid.

Out of the 20 stocks, 14 belong to cyclical (industrials and lenders) while five belong to the digital domain (platform, e-commerce, or niche digital technology), and one defensive (healthcare).

It also said that the "upper limit for qualifying as a midcap stock crosses an all-time high of $5 billion last seen during May 2018 and is up 5 times from the Taper Tantrum lows of $1  billion".

The upper threshold for small caps at $1.6 billion is still below the level seen in January 2018 level of $1.8 billion.