Is it true that digital companies like Zomato, Nykaa, Paytm and Policybazaar have been included in the large cap list for mutual funds? What does that imply?

As you must be aware, the Association of Mutual Funds of India (AMFI) updates the list of large cap, mid-cap and small stocks on a half yearly basis based on market cap. As per SEBI regulations on mutual funds, the top 100 companies on market are large cap, the next 150 are mid-caps and the rest are small caps. The recent IPO listings like Policybazaar, Zomato, Nykaa and Paytm, apart from 9 other stocks have been upgraded by AMFI to large caps.

At the same time, a total of 20 companies were lowered from large caps to mid-caps. In addition, there have been scores of other companies that were either upgraded to mid-caps and large caps or lowered to mid-caps and small caps, depending on their average market capitalization. This is likely to result in some fresh inflows from the large cap and diversified mutual funds in India as also small caps where stocks are upgraded.