FOMO alert: Retail investors sold 1,051 stocks before they soared 36% on average

Retail investors may have exited too early from a large number of Indian stocks during the June quarter. Shareholding data shows that retail ownership declined in 1,051 NSE-listed companies between March 31 and June 30, 2026, even as their average stock price climbed 35.79%.

That was significantly higher than the 24.22% average gain recorded by 1,130 companies where retail holding increased during the quarter, according to data from Prime Database. The data highlights a sharp divergence between retail ownership trends and stock market performance. A decline in retail holding did not necessarily signal weakness. In several cases, retail investors reduced their exposure just as share prices embarked on strong rallies.

The data compares changes in retail shareholding between the March and June quarters with stock price movements during the same period. HFCL delivered the biggest gain among the top 10 stocks, surging 213.66% during the quarter despite retail investors reducing their holding. Adani Green Energy rose 84.93%, while Adani Enterprises and Adani Power gained 72.62% and 48.75%, respectively.


Retail investors also cut their exposure to Suzlon Energy, Yes Bank and Trent, even as the three stocks gained 48.89%, 40.17% and 49.40%, respectively.

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Retail buying was not always rewarded

The data also shows that higher retail ownership was associated with more modest average gains. The 1,130 companies where retail holding increased posted an average price increase of 24.22% during the quarter.

That does not establish that retail selling caused the subsequent gains. However, it does underline the risk of interpreting a fall in retail ownership as a straightforward negative signal for a stock.

The divergence also comes at a time when retail investors continue to have a significant presence in smaller companies. As of June 30, retail investors held 15.55% of the total shares by number across NSE-listed companies, compared with 5.28% for foreign institutional investors and 6.96% for domestic institutional investors.

However, retail participation was much lower in the largest companies. Retail ownership stood at 6.75% in Nifty 50 companies and 6.40% among the top 100 NSE-listed companies.

Mid- and small-cap earnings remain in focus

The relative strength of mid- and small-cap stocks could be one factor behind the sharp gains seen in several companies where retail holding declined.

Dinshaw Irani, managing director and chief executive officer of Helios India, said the June-quarter earnings season had been broadly positive, with positive surprises significantly outnumbering negative ones.

“Once again, the mid and small caps recorded far greater growth in earnings as compared to the large caps. This was reflected in the respective indices, with Nifty SmallCap 250 beating the Nifty Midcap 150, which in turn beat the Nifty 50,” Irani said.

“We expect a similar trend to continue as we believe the earnings growth of the mid and small caps universe will maintain the outperformance vis-à-vis the large caps universe,” he said.

Irani attributed the expected divergence to the composition of the two segments.

“This is due to the large caps universe cohort consisting of low-growth industries like IT, FMCG, large banks, etc., while the mid and small cap universe consists of new-age companies/industries,” he said. “Choosing to invest in large vs mid/small caps is akin to investing in history vs the future.”

360one Capital said it continued to favour a bottom-up, market-cap-agnostic approach focused on domestic capital expenditure, power and transmission and distribution, industrials, private banks, defence, electronics manufacturing services and outsourcing, precision engineering, select exporters and quality compounders.

The firm said crude oil volatility strengthened the case for energy resilience through domestic power, grids, storage and alternative fuels. It also highlighted localisation, defence indigenisation and global outsourcing as structural opportunities for defence, EMS and precision engineering.

For retail investors, the data offers a counterintuitive takeaway: exiting a stock may reduce portfolio risk, but it can also create a significant opportunity cost if the company’s earnings, sector outlook or market narrative improves soon after. In the June quarter, that trade-off translated into a potential FOMO moment across more than 1,000 stocks.