The Indian mutual fund landscape is poised for a significant reshuffle in early 2026, with a new wave of companies led by recent IPO stars ready to challenge established market leaders. The bi-annual recategorization by the Association of Mutual Funds in India (AMFI), expected in the first week of January and effective from 1 February 2026, will redraw the market capitalization map for fund managers.
The New Guard: IPO Stars Enter the Large-Cap Arena
The most dramatic shift is anticipated in the large-cap category, traditionally dominated by long-standing titans. Analysis from Nuvama Alternative & Quantitative Research indicates that newly listed entities are projected to make an immediate leap into the top 100 companies by market cap.
LG Electronics India, after its massively oversubscribed IPO in October 2025, is a prime contender. Similarly, Tata Capital, also listed in October, is strongly expected to join the large-cap ranks. The upcoming ICICI Prudential AMC IPO in December 2025 could further disrupt the order, positioning itself for instant large-cap status upon listing.
"This Amfi review could see a new guard take over the large-cap roster," said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research. He described the shift as a "strong reflection of India’s evolving market structure—digital, disruptive and high-growth, which is now becoming mainstream."
Promotions, Demotions, and Rising Thresholds
The reshuffle is not limited to new listings. Several high-performing mid-cap companies are projected to graduate into the large-cap universe. This list includes Muthoot Finance, HDFC AMC, Canara Bank, Bosch, Cummins India, Polycab India, and Hero Motocorp.
Conversely, the review may bring demotion for some current large-cap stalwarts. Companies like Lupin, Bajaj Housing Finance, Havells India, Zydus Lifesciences, United Spirits, and Jindal Steel & Power are expected to slip into the mid-cap category.
The bar for entry into each category is also climbing higher. Based on average market-cap levels from the review period of 1 July to 31 December 2025, the large-cap cut-off is estimated to rise to approximately ₹1.05 trillion, up from ₹916 billion in June 2025. The mid-cap threshold is also inching up, likely reaching ₹34,800 crore compared to ₹30,700 crore previously.
Dynamic Overhaul in Mid and Small-Cap Baskets
The mid-cap segment (companies ranked 101 to 250 by market cap) is gearing up for one of its most dynamic changes. A host of new-age companies from recent and upcoming listings are projected to enter this corridor.
Potential new mid-caps include Endurance Technologies, Poonawalla Fincorp, Apar Industries, Groww (Billionbrains Garage Ventures), Lenskart Solutions, HDB Financial Services, and the yet-to-be-listed Meesho. Pagaria highlighted this trend, noting a "wave of new-age tech companies expected to jump straight into the mid-cap category."
However, this influx creates a squeeze, pushing several existing mid-caps into the small-cap basket. Companies likely facing this demotion include Sona BLW, Gujarat Gas, LIC Housing Finance, AIA Engineering, Metro Brands, and KPIT Technologies. Borderline candidates like AWL Agri Business, NLC India, and Tata Elxsi are also on watch.
While these categorization changes do not automatically trigger fund inflows or outflows, they serve as a critical rulebook. Active mutual fund managers closely monitor the official AMFI list when making fresh investment decisions or adjusting portfolio holdings across different scheme categories, making the January 2026 announcement a pivotal market event.
