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Portfolio managers have added several micro-cap stocks in June, focusing on quality management and financials. Top additions include Mold-Tek Packaging, Banco Products, and GMM Pfaudler, among others, each added by multiple PMS strategies. These stocks, with market capitalizations under ₹6,000 crore, were selected for their growth potential.

Despite market volatility, fund managers continued to focus on mid-cap stocks in May. Top additions include Mazagon Dock Shipbuilders, Bharat Dynamics, and Oracle Financial Services Software, each picked up by multiple PMS strategies. These stocks have seen significant interest, with many PMS strategies already holding them.

Portfolio Management Services (PMS) managers favor a bottom-up approach but also consider sectoral prospects. The top sectors with promising potential include Financial Services (26.6% weight) led by ICICI Bank, Capital Goods (11.5%) with Bharat Electronics, Healthcare (9.8%) featuring Divis Lab. Other key sectors include IT, Automobiles, and Consumer Durables

The rally in small and midcaps is facing scrutiny as several funds, including mutual funds and PMS, have exited key midcap stocks like Ashok Leyland and Indian Hotels. However, new picks include Bank of India and HPCL. While fund exposure increased in stocks like Coforge and Sona BLW, mid and smallcap indices have declined amid concerns over earnings headwinds and elevated valuations, signaling a potential inflection point.