India's Stock Market Giants: Big Shake-Up Coming! New Stars Rise, Old Names Fade in 2026?

The Association of Mutual Funds in India (Amfi) is preparing for a significant re-categorization of market capitalization rankings, set to take effect in February 2026. This regular review promises to reshape the landscape, potentially elevating new entrants to large-cap status while shifting established players between categories.

New Guards Ascend to Large-Cap Status

• Tata Capital, recently listed, is anticipated by Nuvama Alternative & Quantitative Research to join the elite large-cap club.
• The upcoming ICICI Prudential AMC IPO in December is poised for an immediate jump into the large-cap category.

Established Firms on the Move

• Several mid-cap companies demonstrating robust growth are projected to graduate into the large-cap universe.
• Notable candidates include Muthoot Finance, HDFC AMC, Canara Bank, Bosch, Cummins India, Polycab India, and Hero Motocorp.
• Conversely, some current large-cap stalwarts are expected to be reclassified into the mid-cap segment.
• Companies like Lupin, Bajaj Housing Finance, Havells India, Zydus Lifesciences, United Spirits, and Jindal Steel & Power may see this demotion.

Mid-Cap Dynamics and New Entrants

• The mid-cap basket is set for a dynamic overhaul with numerous recent and upcoming listings expected to enter.
• Candidates like Endurance Technologies, Poonawalla Fincorp, Apar Industries, Groww, Lenskart Solutions, HDB Financial Services, PhysicsWallah, and Anthem Biosciences are poised to enter the mid-cap corridor.
• New-age tech companies are particularly expected to make a significant impact in this category.

Rising Thresholds Define Categories

• The criteria for classification are becoming more stringent, with rising market capitalization thresholds.
• The estimated cut-off for large-cap is now around ₹1.05 trillion, an increase from ₹916 billion previously.
• The mid-cap entry bar is also climbing, likely reaching ₹34,800 crore from ₹30,700 crore.
• The cut-off period for the January 2026 review spans July 1 to December 31, 2025, based on average market capitalization over six months.

Categorization Methodology

• Companies are ranked by their full market capitalization.
• The top 100 companies by market cap are designated as large-cap.
• Companies ranked from 101st to 250th are classified as mid-cap.
• All remaining companies fall into the small-cap category.

Impact

• While Amfi's categorization changes do not directly trigger mandatory fund inflows or outflows, they are critical signals for active mutual fund managers.
• Fund managers closely follow these lists when making investment decisions, adjusting portfolios, and taking fresh positions to align with scheme mandates (e.g., large-cap funds investing primarily in large-cap stocks).
• This can indirectly influence stock demand and supply dynamics as funds rebalance their holdings.
• Impact Rating: 8

Difficult Terms Explained

• Market Capitalization: The total market value of a company's outstanding shares, calculated by multiplying the current share price by the number of shares.
• Amfi: Association of Mutual Funds in India, the industry body for mutual funds in India.
• IPO: Initial Public Offering, the first time a private company offers its shares to the public.
• Recategorization: The process of changing the classification or category of something.
• Fund Manager: A professional responsible for managing a mutual fund's investment portfolio.