#TweetStorm - A Quick take on the new #SEBI circular. 1) The new rule states that a Multicap Fund needs to have 25% in #LargeCaps, 25% in #Midcaps. 25% in #Smallcaps. This needs to be aligned before January 2021. 
Data Source - MoneyControl 2) The Total AUM of the Multi-Cap Funds is 1.53 lakh crores. 25% allocation to #Smallcap =38300 crores. Current Allocation= 11240 Crores. Potential Buying or Difference to be Aligned = 27062 crores.
3) Why is everyone going mad about it in #Whatsapp and #Twitter. Total Market Cap of 251st to 500th Company is 9 lakh crores. 27000 Cr implies 3% of Equity. In many of smallcaps promoters own 50-75%. That's like 10% of float buying theoretically. Source - AMFI.
4) The Largest Multi-Cap Fund for example needs to re-align 7000 cr to #Smallcaps. The Largest #Smallcap by Market Cap is 7000 Crores. !! 5) Lot of things can happen. Earlier a simple switch was to change made of fund which is not possible as only one #fund in one #category.
6) At the first level, it looks like there will be outflows from #MutliCap Funds to #LargeCap Funds by #Investors. There will be some re-alignment towards #Smallcaps. All this provided current definitions of #Smallcaps #Midcaps #Largecaps remain same.
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