small cap After continuously investing in stocks for 30 months, the mutual fund house has withdrawn money for the first time. According to data released by Amfi, Rs 97 crore was withdrawn from small-cap schemes in March. Let us tell you that after the warning of market regulator SEBI that a bubble may form in small and medium-cap stocks, mutual fund houses have made withdrawals for the first time. Not only this, investment in midcap stocks has decreased. Investment in midcap stocks by mutual funds declined by 44 per cent in March.
Inflows into open-ended equity mutual funds declined 16 per cent to Rs 22,633 crore in March due to outflows in smallcap funds, according to data released by the Association of Mutual Funds of India on April 10. However, inflows into equity funds remain in the positive zone for the 37th consecutive month. Investment through SIP remained more than Rs 19,000 crore for the second consecutive month.
Why are mutual fund houses withdrawing money?
In early March, SEBI, through Amfi, had told fund houses that it was concerned about the unabated rally in mid- and small-cap stocks and asked them to tighten their investment procedures related to schemes in these categories. It also for the first time asked fund houses to conduct a stress test for these types of schemes to see how long it would take them to move a major portion of their portfolio into these schemes. SEBI’s warnings related to mid- and small-cap stocks were mainly based on concerns over the high valuations of these stocks.
What is the impact on smallcap and midcap stocks?
Market experts say that smallcap and midcap stocks have registered tremendous growth in the last one year. Many stocks have given excellent returns of 200% to 300%. Many stocks have come under the category of multibagger. This rise in the shares of small companies has come due to investment by mutual fund houses. Now when mutual fund houses are withdrawing their money or reducing investment, there will be a brake on the rise in these stocks. A big decline may also be seen in many stocks. Therefore, small investors should invest only in quality stocks. At the same time, money should be withdrawn from profitable stocks and invested in large cap stocks.
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