Mutual funds focusing on small-cap stocks were particularly affected, with notable schemes like Mahindra Manulife Small Cap and Aditya Birla SL Small Cap experiencing substantial NAV erosion of up to 22 per cent.

Over the last five months, India’s equity markets have been on a rollercoaster ride. After reaching their all-time highs in September 2024, the key indices witnessed a sharp correction. Notably, during this period, the Nifty 50 Total Return Index (TRI), Nifty Midcap 150 TRI, Nifty Small-cap 250 TRI, and Nifty Microcap 250 TRI declined by 11 per cent, 16 per cent, 19 per cent and 16 per cent respectively.

Small and mid-cap segments witnessed a huge sell-off, especially during the current market fall. Factors including disappointing Q3 earnings, persistent FII sell-off, and higher valuation impacted investors’ sentiments.

Equity mutual fund schemes that invested heavily in small-cap stocks saw significant erosion in their NAV value. Within the small-cap categories, Mahindra Manulife Small Cap, Aditya Birla SL Small Cap, and Quant Small Cap corrected the most by 22 per cent, 20 per cent, and 19 per cent, respectively, during the period. HSBC Midcap, Bandhan Midcap, and Quant Mid Cap were the top three mid-cap schemes that lost the most.

About one-fifth of the small-cap stocks that mutual funds held corrected more than 25 per cent over the last five months. Here are the top small-cap stocks that eroded the mutual funds’ wealth over the last five months. Stocks were selected based on their significant price declines and the large number of schemes that included them in their portfolios. Active as well as passive equity-oriented schemes were considered for the study. Portfolio data as of January 31, 2024. Returns calculated for the period between 23-Sep-24 and 12-Feb-25.

Published on February 14, 2025