FIIs' midcaps holdings soar in FY26; smallcaps deliver mixed results

Foreign institutional investors (FIIs) seem to be doubling down on India’s midcap space, even though their overall holding in NSE-listed companies dipped slightly in the June 2025 quarter. What stands out is that the top five midcap stocks with the highest FII ownership have all delivered strong double-digit returns in FY26 so far, showing that these bets are already paying off.

Meanwhile, FIIs' top smallcap holdings have seen mixed results — some stocks have rallied sharply, while others have underperformed.

Why FII Moves Matter

For retail investors, tracking where FIIs are investing can offer valuable clues. Since FIIs typically conduct deep due diligence before committing large sums, their investments often reflect confidence in a company’s fundamentals and long-term prospects.

Finding the right stock in the midcap and smallcap space isn’t easy—it’s a high-opportunity, high-volatility zone. That’s why checking which companies have attracted significant FII stakes can be a useful filter for stock picking. Still, it’s essential not to rely solely on FII interest. Investors should also assess other key factors like earnings growth, valuations, balance sheet strength, and the industry’s future outlook.

Midcaps Deliver, Backed by FIIs

FIIs' top five picks in the Nifty Midcap 100 index—360 One WAM, One97 Communications (Paytm), Max Healthcare, PB Fintech (Policybazaar), and Max Financial Services—have all clocked double-digit returns in FY26 so far. This impressive performance reflects not only strong institutional confidence but also robust business momentum and favorable sectoral trends.

Smallcaps: A Mixed Bag

The story in the Nifty Smallcap 100 space is more uneven. FIIs hold significant stakes in Redington, Five-Star Business Finance, Delhivery, CAMS, and Home First Finance. However, their performance varies widely—one of these stocks has soared nearly 80% this fiscal year, while another has declined 17%, highlighting the risks and volatility typically associated with smallcap investments.

According to Primeinfobase, FII shareholding by value in NSE-listed companies stood at 17.04% as of June 30, 2025—down slightly from 17.22% at the end of March. Despite this small dip in percentage, the total value of FII holdings jumped 10.53% to Rs 77.52 lakh crore, showing that foreign investors are selectively increasing exposure to stocks they believe in.

Among individual companies, the top five with the highest FII stakes are:

360 One WAM Ltd. – 68.54%

CarTrade Tech Ltd. – 67.30%

Redington Ltd. – 62.58%

Le Travenues Technology (ixigo) – 59.90%

Dr. Agarwal’s Health Care Ltd. – 59.26%

These companies span high-growth sectors like wealth management, healthcare, logistics, and digital services—areas FIIs likely see as strong long-term bets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)