Retail investors now own a bigger slice of smallcap companies than at the start of 2023-24 (FY24), underscoring their growing conviction about investing in this red-hot space. Data from Capitaline shows mutual funds' (MFs') average holding in the National Stock Exchange Nifty Smallcap 250 rising to 9.26 per cent from 8.67 per cent during the first six months of FY24, with the number of companies with over 20 per cent MF holdings increasing from 24 to 28. In comparison, MF holdings in Nifty50 companies have gone up only marginally, from 9.67 per cent to 9.75 per cent.
Small-cap funds have enjoyed a massive run-up over the past year. The category has turned in an average return of 109 per cent - the best-performing fund has yielded a humongous 201 per cent. Many investors, however, are concerned whether the category has turned risky after such a sharp rise.
In rupee terms, India's market cap is currently about Rs 184 trillion - 90 per cent of the GDP of Rs 203 trillion for FY20 at current prices.
This is a shift as until recent months, fund managers were reducing exposure to these sectors.
Stocks mutual funds had invested in had risen almost to pre-pandemic levels in March.
The BSE SmallCap index gained 106 per cent in the one year ended May 12, 2021.
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