Top 5 Small Cap Stocks to Invest: Mutual Funds Buy Smallcap Stocks

Recently, investors have been giving smallcap stocks a lot of attention. This is because the Nifty Small Cap Index has shown significant growth in recent times. Mutual funds are being looked to for guidance on good investment opportunities as we know from this article which will tell us about five top performing companies that fall under the category of small cap businesses according to market capitalization classification along with other handy information such as what exactly does smallcap mean and comparisons between different sizes like midcap or large caps.

 

Mid Caps Vs Small Caps Vs LargeCaps

Before discussing individual stocks, it’s important to understand what makes one company a mid cap while another may be considered large cap:

Small Cap: These are typically companies with a market capitalization below Rs.5000 crore.

Mid Cap: This term refers to those firms whose value falls within Rs.5000-20000 crore range.

Large Cap: Any business that surpasses Rs.20000 crore in terms of its valuation would fall into this category irrespective of whether they rank among top hundred by m-cap or not.

 

However SEBI had brought new definitions in October 2017 which led them categorize organizations based on their ranks rather than just looking at numbers related with size alone; hence now we have following classifications:

• Large Cap - Top 100 Companies as per Market Capitalization

• Mid Cap - Ranked 101-250 by M-Cap

• Small Cap - Ranked beyond 251

 

 

Top Five Smallcap Stocks With Mutual Fund Investments

Let’s look at those five small-cap stocks which enjoyed major interest among mutual funds:

1. Crompton greaves

Fencing, pumps and domestic appliances where few areas dominated by Crompton Greaves being one amongst best players in India. The company has recorded an increase of 40% YoY indicating strong growth prospects ahead.

A total of 43.6% mutual fund holding is invested in Crompton which shows its potential as an investment option for investors eyeing robust small caps. Mutual funds have put in approximately Rs.11,000 crores into this company reflecting their belief in it as a long-term bet.

 

2. IPCA Laboratories

The pharmaceutical sector is where IPCA Laboratories operates; they are involved with the manufacturing and marketing of pharmaceutical products. They supply raw materials to various drug manufacturers worldwide besides having a presence across more than 120 nations.

IPCA Laboratories has around 28.9% mutual fund holdings amounting to about Rs.8,200 crores

 

3. Kalpataru Projects

Kalpataru Projects Project is an international construction company involved in many sectors such as electricity generation, tea growing and factory construction. The wide range of the business’s interests enables it to keep its strong position in the market.

Another interesting smallcap investment opportunity is Kalpataru Projects Project which holds 39.7% mutual funds and investments worth 8,150 crore rupees.

 

4. Whirlpool India

Among refrigerator producers Whirlpool India holds a significant place in this market sector. As shown by the mutual fund holding equaling 27.8%, it is well supported by investors.

Mutual funds have invested around Rs.7,000 crores into Whirlpool indicating belief in its competitive position within markets and future growth potential thereof.

 

5. MCX (Multi Commodity Exchange)

MCX ranks among top futures trading platforms for commodities where it controls a large share of this marketplace. This has been backed up by Rakesh Jhunjhunwala who is one of major investors thereby confirming its status among traders’ community as well as overall awareness about MCX being widespread.

 

Detailed Video

 

The Purpose of Mutual Funds in Smallcap Investments

Mutual funds are one of the most important parts of the investment community for smallcap stocks. They invest money by doing a lot of research and studying the market. Long-term growth potential is mostly what they look at.

There are several advantages to investing in small-cap stocks through mutual funds:

Diversification: These types of funds usually have many different kinds of stocks so that if one fails, others will succeed.

Professional Management: People who manage them watch trends carefully and use data to make good choices on behalf of their clients who own shares.

Accessibility: You can buy into them even if you don’t have much cash, and they also allow individual investors access to smaller companies which might not be easy otherwise.

 

How to Navigate Market Trends

Knowing how markets are going to move next is key when it comes down whether or not an investor should take out their money from any given stock. As of now we see that Nifty index has been consolidating indicating indecision within people’s minds about where things stand economically

During these times it’s best stay alert but also cautious because sometimes prices may be locked within range making difficult detecting when enter or exit trades especially for beginners who may lack experience in reading technical charts like RSI, MACD etc., thus focus more on watching price action than relying only on indicators which might lag behind resulting losses where keeping eye on strategic levels could help make better choices.

 

 

Conclusion

Investing into small cap stocks can turn out profitable particularly with mutual fund insights. The smallcap category boasts some really strong contenders supported by heavy investments from mutual funds as seen in this article's top five picks.

It is important as always to do your own homework before making any decisions related to financial matters; however, being aware of what’s happening across different sectors can give you an edge towards positioning yourself favourably within this space thereby achieving success over time.

Disclaimer: This Stock Analysis is only for informational purposes and should not be considered as investment advice. Always do your research and consult with a financial advisor.