In favour! FIIs buy 7 multibaggers that soared up to 730% after 2 quarters of selling

Foreign institutional investors have started returning to select midcap and smallcap stocks after cutting their holdings for two straight quarters, according to data from Ace Equity. At least 7 stocks saw FIIs reduce their stake in the December 2025 and March 2026 quarters, before buying again in the June 2026 quarter. Many of these stocks have also delivered strong one-year returns, showing that foreign investors are returning to parts of the market where price momentum has already been strong.

The buying comes as broader FII flows into Indian equities have also improved. After selling in most months earlier this year, FIIs turned net buyers in July and August. They bought Indian shares worth Rs 11,045 crore in July and Rs 13,123 crore in August.

Cupid saw the sharpest one-year gain among the 10 stocks. The stock has risen 730% in the past one year. FII holding in the company had fallen from 2.58% in September 2025 to 1.48% in December and 1.01% in March 2026. It then rose sharply to 4.17% in June.


Sansera Engineering was another stock where FIIs returned after two quarters of selling. Their holding declined from 19.58% in September to 19.36% in December and 18.79% in March. It rose to 21.52% in June. The stock nearly tripled investor wealth in the past one year.

Welspun Corp also saw a similar trend. FII holding fell from 11.79% in September to 11.45% in December and 11.23% in March. It increased to 14.61% in June. The stock is up 157.86% over one year. Avalon Technologies saw FII holding fall from 10.04% in September to 7.56% in December and 6.42% in March. The stake rose to 7.81% in June. The stock has returned 157% in the past one year.

Diamond Power Infrastructure also saw foreign buying return in the June quarter. FII holding had declined from 1.42% in September to 0.44% in December and 0.36% in March. It rose to 1.77% in June. The stock has gained 142% over one year.

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Happy Forgings saw a smaller but clear reversal. FII holding slipped from 2.02% in September to 1.84% in December and 1.73% in March. It rose to 1.88% in June. The stock is up 131% in the past one year. Tourism Finance Corporation of India saw FII holding fall from 4.61% in September to 4.34% in December and 2.77% in March. It then rose to 5.46% in June. The stock has delivered a one-year return of 110%.

Deccan Gold Mines also saw foreign investors add exposure after two quarters of trimming stakes. FII holding moved from 1.88% in September to 1.87% in December and 1.84% in March, before rising to 2.13% in June. The stock is up 100% over one year.

Shivalik Bimetal Controls completed the list. FII holding fell from 3.03% in September to 2.59% in December and 1.73% in March. It rose to 2.04% in June. The stock has returned 86.99% in one year.

The pattern shows that foreign investors are not buying the entire market in the same way. They are returning selectively to companies where growth, liquidity, earnings visibility or stock performance appears to justify fresh exposure.

The return of FII buying in July and August has also helped sentiment. Foreign investors had been cautious earlier in the year because of rich valuations, global uncertainty and changing expectations around interest rates. Their recent buying suggests some of that pressure has eased, though analysts remain watchful.

Motilal Oswal said the durability of foreign inflows remains a key monitorable amid geopolitical uncertainty, moderation in the AI-led global equity rally and volatility in global bond yields.

Valuation is still the main concern for India. India continues to trade at a premium to other emerging markets. Nandurkar said MSCI India traded at 20 times one-year forward earnings, in line with its 10-year average, but its 98% premium to emerging-market peers was still well above the 10-year average of 63%.

That means foreign investors may remain selective even if flows improve. Companies that look expensive without earnings support may still face selling pressure, while quality growth names and stocks with strong sector tailwinds could continue to attract money.

HSBC recently upgraded India to neutral within Asia and said it preferred quality growth companies in domestically driven sectors such as financials, autos, retail and hospitals.

The June quarter data suggests foreign selling is no longer broad-based enough to hurt every stock. In several counters, FIIs used the correction or earlier exits to rebuild positions. Whether July and August buying continues will decide if this becomes a stronger trend or only a short-term reversal.

Data: Ritesh Presswala

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