Smallcap shares: The prevailing market seems to be characterised by a more positive sentiment, with a greater focus on the upside potential rather than downside risks. Valuations may appear expensive than historical average, Jain said.
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Retail investors now own a bigger slice of small-cap companies than a couple of years earlier, attributable to their growing conviction in mutual fund (MF) schemes focused on this space.
Data from Capitaline shows MFs average holding in the National Stock Exchange Nifty Smallcap 250 rising to 8.67 per cent, from 7.67 per cent in the past two financial years, with the number of companies with over 20 per cent MF holdings, rising from 15 to 24.
At the end of May, the top five small-cap firms with the highest MF holdings were Carborundum Universal, Blue Star, Cyient, Gujarat State Petronet, and Cholamandalam Finance.