Seeing big bucks in nanocaps, investors have risked billions
high-risk-high-return bets in the recent bull run drove investor frenzy in nanocap stocks-those with a market capitalisation of less than ₹2,100 crore as of Wednesday. As per a study by Aditya Birla Sun Life Mutual Fund, the value of individual investors' direct holdings in nanocap stocks has moved up eightfold from ₹40,000 crore in June 2021 to ₹3.3 lakh crore in September 2024.
Nanocap companies-among the lowest in heap-are ranked 1,041 and below in terms of market capitalization. They come after the micro-cap companies with a market value ranking between 521 and 1,040. Small-cap companies are ranked between 261 and 520 by market capitalisation, while large- and mid-cap are ranked form the top 260 companies. Currently, TCC Concept with a market capitalisation of ₹2,137 crore is the 1,041st biggest company on the NSE.
The Aditya Birla Sun Life Mutual Fund study showed retail investor ownership in nanocap companies has moved up from 20% to 25.2% of their total market cap. «As these companies are relatively smaller, the possibility of multi-fold returns increases significantly as some of the companies are at the early growth stage,» said Shripal Shah, MD, Kotak Securities. «In the past there have been stocks in this segment that have given multi-bagger returns, thereby attracting more investors to this segment.»
Many stocks in the nanocap segment, which also includes illiquid penny stocks, are mostly not covered by mainstream analysts at broking firms and are not bought by larger institutional investors as they do
