Just Dial, Nazara, Tata Coffee among small-cap picks of mutual funds

Indian stock indices have made a strong comeback in recent weeks after the sharp correction over the last couple of months, thanks partly to robust inflows from domestic investors either directly or via mutual funds.

Quarterly shareholding data shows mutual funds pushed up their holding in hundreds of listed companies.

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 a 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 55 companies where MFs bought additional shares, compared to 50 companies in the preceding quarter.

Small-cap picks

The larger companies within the small caps where MFs upped their exposure include Just Dial, Rolex Rings, Maharashtra Scooters, PCBL, Barbeque-Nation, MTAR Technologies, NOCIL, Data Patterns (India), Nazara Technologies, Arvind Fashions, Religare Enterprises, Tata Coffee and CMS Info Systems.

They were also bullish on counters like Gujarat Pipavav Port, Sansera Engineering, ICRA, Mirza International, Neogen Chemicals, Mahindra Logistics, Gateway Distriparks, Voltamp Transformers, La Opala, ISGEC Heavy Eng, Equitas Holdings, Tega Industries, Sudarshan Chemical and Mold-Tek Packaging.

Several of these were also in the buy calls of MFs in the preceding quarter ended March 31, 2022, indicating a bullish stance on those companies. These include names like Maharashtra Scooters, Rolex Rings, Religare Enterprises, Barbeque-Nation, Neogen Chemicals, ICRA, Sudarshan Chemical and Tega Industries.

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 nearly a dozen names, almost twice the preceding quarter.

The companies were MFs were especially bullish include Mrs. Bectors Food, CARE Ratings, Barbeque-Nation, Gateway Distriparks, Voltamp Transformers, Mirza International, Lyka Labs, MTAR Technologies, Windlas Biotech, Insecticides (India) and Rolex Rings.