FII Sold ₹5.5 Lakh Crore — But Quietly Bought These 84 Stocks

FIIs have been selling Indian large-caps in one of the more visible selling phases in recent years. What the headlines miss: the same foreign institutions are simultaneously building positions in 84 mid- and small-cap stocks that have delivered up to 19,859% returns since September 2024.

Key Takeaways

• FIIs net sold Indian equities worth ₹5.5 lakh crore between September 2024 and March 2026, per ACE Equity data. The selling was concentrated in banking and large-cap financial stocks.
• Despite this, ACE Equity shareholding data shows FIIs raised stakes in 84 stocks over the same period, many of those positions built from zero.
• Midwest Energy tops the list with a 19,859% two-year return while FII holdings rose from 0% to 12.02%. Investors should cross-check liquidity and fundamentals before reading any single stock as a standalone signal.
• FPI ownership in NSE-listed equities has fallen to a multi-year low, with their stake slipping below 17% in 2025, the lowest level in over 15 years.
• Morgan Stanley’s India strategy team has called an earnings upcycle, expecting investments-to-GDP to reach 37.5% over five years.

The Selloff That Everyone Is Watching

FIIs began selling Indian stocks in October 2024, and the trend continued to accelerate in the following months, with only brief periods of buying. Data compiled by NSDL shows FIIs sold record shares worth ₹1,59,779 crore in 2025 alone, with January being the worst single month at ₹78,027 crore of outflows.

The cumulative damage across the September 2024–March 2026 window adds up to ₹5.5 lakh crore in net equity sales, per ACE Equity. The exit has been heaviest in large-cap banking and financial stocks, exactly the sectors where FIIs historically carried their biggest overweight positions.

By September 2025, DII ownership in NSE-listed companies had soared to a record 18.26%, surpassing FPI holdings of 16.71%, a structural shift that would have seemed unthinkable five years ago, per Prime Database.

But aggregate FII flow numbers tell only one part of the story.

What the Headlines Aren’t Covering: 84 Stocks, FII Money, Multibagger Returns

Buried inside quarterly shareholding pattern disclosures is a counter-narrative. ACE Equity data shows that between September 2024 and March 2026, FIIs increased their stakes in 84 stocks, many of them from zero holdings, and virtually all those stocks delivered extraordinary two-year returns in the same window.

The top names from that list are shown below.

FII Stake Increase & 2-Year Returns: Top Stocks (Sep 2024 – Mar 2026)

The above is a selection from the full 84-stock list. Source: ACE Equity shareholding pattern data, March 2026.

A note on interpretation: In small-cap stocks, FII holdings can be small in absolute size, and liquidity can distort short-term price returns significantly. An increase in FII holding alongside a large price gain does not always indicate a deliberate institutional accumulation call.

Investors should verify business fundamentals, traded volumes, and valuation before drawing conclusions from any individual name on this list.

The Sectoral Pattern: Where FII Conviction Is Building

When the 84 stocks are mapped by sector, three clusters emerge clearly.

Defence & Engineering:

Apollo Micro Systems, which supplies electronics systems for missile, avionics, and submarine applications, saw FII holdings climb from 0.19% to 3.64% alongside a 270% two-year return. Paras Defence and Space Technologies saw FII holding rise from 3.46% to 5.06% on a 121% return, riding India’s indigenisation-of-defence push. Axiscades Technologies, an engineering services provider, saw FII holdings move from 0.40% to 1.16%.

Specialty Chemicals & Pharma:

Acutaas Chemicals saw FII holdings expand from 13.87% to 19.48% on a 372% return. Panacea Biotec attracted fresh FII interest, with holdings rising from 0.37% to 1.60%. Shaily Engineering Plastics, a global manufacturer of insulin delivery devices and a high-regulatory-barrier business, saw FII stake surge from 3.11% to 16.73% with a 346% return.

Power & Infrastructure:

Midwest Energy saw FII holding go from zero to 12.02%, though the stock’s 19,859% return should be read with caution given the small-cap liquidity context. Meghna Infracon Infra and AGI Infra also attracted measurable FII positioning.

Is This a Rotation, Not an Exit?

The scale of FII selling in headline indices is real. But the pattern within shareholding data points to selectivity rather than a complete exit from Indian equities.

Sailesh Raj Bhan, CIO of Equity Investments at Nippon India Mutual Fund, noted that FII flows are expected to remain strong, especially since their share in Indian equity ownership has dropped to below 18% from over 25% a few years ago, and that sticky SIP inflows averaging close to $3 billion a month, along with high liquidity and improved earnings expectations, should continue to support domestic flows.

Bhan added that a recovery in earnings of over 12–15% will be critical for any market rerating, noting that markets spent nearly nine months consolidating since June 2024, with the recent pullback driven by a sharp drop in interest rates, liquidity support, and lower oil prices, all of which have improved expectations for an earnings recovery.

On the global brokerage side, Morgan Stanley’s India equity strategy team has struck a constructive note. Strategists Ridham Desai and Nayant Parekh said in a June 2026 note that the bottom for Indian equities may be behind us, with earnings growth acceleration likely in the pipeline and valuations and sentiment coming off near extremes.

Morgan Stanley highlighted that investments as a share of GDP could rise to 37.5% over the next five years, supported by a favourable policy backdrop, an undervalued currency, modest real rates, and fiscal stability, with capital spending in energy, defence, semiconductors, fertilisers and data centres as the core drivers.

What Should Investors Watch?

The FII flow data on its own has become a less reliable compass for Indian equity direction than it once was.

By 2026, FPI ownership of NSE-listed equities had fallen to roughly 15–16%, a multi-year low, while DII ownership rose above it for the first time, powered by record domestic mutual-fund and SIP inflows.

Even as FII outflows continued, domestic institutions absorbed much of the selling and broader indices held up better than historical playbooks would have predicted.

For investors who track institutional positioning, the more useful signal may not be aggregate FII flow data but sector-level and stock-level shareholding disclosures, filed quarterly with exchanges under SEBI regulations, which reveal where foreign capital is actually being deployed, as opposed to where it is exiting.

Monitor live: FII-DII flow data on the NiftyTrader FII-DII Tool and track options positioning sector-wise on the NiftyTrader Option Chain.

Bottom Line

The ₹5.5 lakh crore FII selloff in Indian equities since September 2024 is well-documented, but it is not the complete picture.

ACE Equity shareholding data shows foreign institutions have simultaneously been building positions in 84 mid- and small-cap names that delivered multibagger returns over the same window.

The pattern points to a sectoral rotation, with FII conviction clustering around defence, specialty chemicals, power infrastructure, and engineered manufacturing.

With Morgan Stanley calling an earnings upcycle and domestic institutions absorbing the FII exit in broader markets, the evidence suggests foreign capital has been rotating within India, not retreating from it.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock mentions in this article are based on publicly reported shareholding data and are not buy or sell recommendations.

NiftyTrader is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making investment decisions. Data sourced from ACE Equity, NSDL, NSE/Prime Database, and publicly available brokerage strategy reports.