Here’s a list of small-cap stocks that mutual funds were buying last quarter

Indian stock indices had corrected sharply a month ago but have recovered some of the lost ground in the last one week, thanks mainly to buying by local investors even as foreign institutional investors remain net sellers.

While most local fund managers have been voicing concerns about the state of valuations, quarterly shareholding data shows they pushed up their holding in hundreds of listed companies.

One clear trend was that MFs turned more bearish towards mid-caps compared to larger companies.

But one segment of the stock market that is usually seen as a haven for punters looking to make a quick buck with trading opportunities and retail investors who get attracted by lower per share price is the small-cap space, or companies with market capitalisation of under Rs 5,000 crore.

This segment tends to have a high beta and tends to swing much more in a volatile market condition. Many investors and analysts try to fish for hidden gems who can be a large cap over the medium to long term.

So how did MFs behave in the small-cap space?

If we look at stocks with a market cap of over Rs 500 crore to filter the smallest of the micro caps, we get a list of around 50 companies where MFs bought additional shares.

Small-cap picks

The larger companies within the small caps where MFs upped their exposure include CCL Products, Gujarat Mineral, Ingersoll-Rand, Suprajit Engineering, Jamna Auto, Maharashtra Scooters, HEG, FDC, Rolex Rings, Aarti Drugs, Hikal, Tarsons Products, Religare Enterprises, Barbeque-Nation and TCNS Clothing.

They were also bullish on counters like Neogen Chemicals, ICRA, Greaves Cotton, Karur Vysya Bank, IFB Industries, Ami Organics, Mishra Dhatu Nigam, Indoco Remedies, Sudarshan Chemical, RateGain Travel, Tega Industries, Dodla Dairy, Gokaldas Exports, Arvind and Greenply Industries.

Several of these were also in the buy calls of MFs in the preceding quarter ended December 31, 2021, indicating a bullish stance on those companies. These include names like FDC, Suprajit Engineering, Ingersoll-Rand, Greaves Cotton, TCNS Clothing, Karur Vysya Bank, Jamna Auto, Sudarshan Chemical, Newgen Software and IFB Industries.

FDC and Jamna Auto have figured among the buy counter of MFs for three straight quarters now.

Significant picks by MFs in small-cap pool

If we track stocks where MFs were particularly stoked and bought 2% or more additional stake last quarter we get just six names, the same as the previous quarter.

The companies were MFs were especially bullish include Neogen Chemicals, Stove Kraft, Barbeque-Nation, Century Enka, JMC Projects (India) and CCL Products India.