5 Under-the-Radar Stocks Common Across India's Top Smallcap Funds

India’s leading smallcap fund managers are showing a rare consensus, converging on a select group of five stocks despite varying investment styles. As market volatility persists, these high-conviction picks reveal where the country's largest pools of smallcap capital are being deployed.

The Power of Convergence: ₹1.51 Lakh Crore in Focus

Data from ACE MF highlights a significant trend among the three largest smallcap mutual fund schemes in India: Nippon India Small Cap Fund, HDFC Small Cap Fund, and SBI Small Cap Fund. Together, these giants manage a staggering ₹1.51 lakh crore in investor assets.

While these funds have distinct mandates, they have collectively parked approximately ₹8,000 crore—representing 5.34% of their pooled assets—into just five specific companies. This convergence suggests that professional fund managers see similar fundamental value in these "under-the-radar" names, regardless of their fund's total size.

Deep Dive into the Top 5 Common Holdings

The shared conviction is most visible in the following five stocks, ranked by their combined exposure across the three funds:

Notably, SBI Small Cap exhibits the highest concentration in these names, with nearly 10% of its entire portfolio riding on these five stocks, compared to 6.64% for HDFC and a modest 2.49% for Nippon India.

Market Sentiment: Why Fund Managers are Buying

The shift toward these stocks comes as fund managers turn more constructive following recent market corrections. Industry experts note that while mid-caps recently saw 36% YoY profit growth, small-caps followed with a robust 23%, significantly outperforming large-caps at 10%.

Brokerages like Monarch Networth Capital suggest that the "time and value correction" seen in small and mid-cap stocks over the last 18 months has made bottom-up stock picking highly attractive. This optimism is reflected in the Nifty Smallcap 100, which has gained 4.3% in CY26, outperforming the Nifty 50, which fell by over 8% in the same period.

However, caution remains. JM Financial warns that mid-cap and small-cap indices are trading at higher valuations compared to their historical means, with the Nifty Midcap 100 trading at a P/E of 26.8x, compared to 18.8x for the Nifty 50.

Key Takeaways