Data for the March quarter indicates that FIIs raised holdings across a diverse basket of companies spanning financials, capital goods, industrials, and select midcap names. Among the most prominent additions were Vishal Mega Mart, Home First Finance Company, APL Apollo Tubes, Clean Science and Technology, and Accutas Chemicals, all of which saw increases above 3% in foreign ownership.
Within largecaps and established names, FIIs showed selective conviction. Stocks such as Vedanta, Hindalco Industries, HCL Tech, NTPC, and Titan Company saw incremental increases in foreign shareholding, though the magnitude was smaller compared to midcap names.
The trend extends beyond just a handful of stocks, with names such as The Great Eastern Shipping Company, Indian Energy Exchange (IEX), Karur Vysya Bank, BSE, Engineers India, and Aditya Birla Capital also witnessing raising the stake over 1% in each of them.
If we closely look at the data, most of these companies belong to segments are linked to domestic growth oriented, balance sheet strength, or niche industry leadership. For instance, APL Apollo Tubes and other industrial plays are leveraged to infrastructure and construction demand, while financials like Karur Vysya Bank and Home First Finance reflect continued interest in credit growth stories within India.
Similarly, companies like IEX and BSE represent structural plays on India’s evolving financial and power markets.
This suggests that while global investors are cautious on India as a whole, they are still willing to deploy capital in pockets where earnings visibility and valuations are relatively attractive.The buying pattern also suggests a tilt toward companies with improving sectoral tailwinds. Shipping Corporation of India, Transformers and Rectifiers, Garden Reach Shipbuilders, and other engineering-linked companies point to ship-building and export-oriented themes.
Meanwhile, niche pharma and specialty chemical companies like Divi’s Labs and Clean Science indicate continued preference for high-margin, globally competitive businesses.
This selective accumulation comes against the backdrop of one of the sharpest foreign outflows in recent years. Since the escalation of tensions in West Asia earlier this year, FIIs have pulled out over Rs 1 lakh crore from Indian equities. The benchmark indices have reflected this pressure, with the Nifty correcting more than 9% this year.
The shift in global macro conditions has been a key driver. Elevated crude oil prices have emerged as a central concern for India’s macro stability. With Brent crude hovering near $100 per barrel during the peak of tensions, investors have become increasingly wary of the twin impact on India’s current account deficit and inflation trajectory.
Higher oil prices not only widen the trade deficit but also feed into domestic price pressures, potentially forcing tighter monetary policy at a time when growth support is needed.
At the same time, the global interest rate environment has turned less favourable for emerging markets. US 10-year Treasury yields moving toward 4.5% have significantly altered the risk-reward equation. For dollar-based investors, higher risk-free returns in the US reduce the attractiveness of equities in emerging markets like India, especially when coupled with currency volatility.
The depreciation of the rupee has added another layer of complexity. With the currency breaching the Rs 95 mark against the US dollar, foreign investors face an additional drag on returns. Even if equity markets deliver gains in local terms, currency losses can erode overall returns in dollar terms, making India less competitive relative to other markets.
In fact, India’s relative positioning within emerging markets has weakened in recent months. While flows into other Asian markets such as South Korea and Taiwan have stabilised, India has continued to see sustained outflows. This reflects a broader shift in global capital allocation, where investors are increasingly comparing earnings growth prospects, valuations, and macro stability across regions.
Analysts say this behaviour is consistent with a “risk recalibration” phase rather than a complete withdrawal. The absence of aggressive buying, however, indicates that conviction remains limited at a broader market level.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the trajectory of foreign flows will hinge on developments in West Asia and oil prices. A meaningful peace could stabilise India’s macro conditions, but a prolonged conflict would continue to weigh on investor sentiment and delay any return of sustained FII inflows.
(Data: Ritesh Presswala)
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