Foreign Institutional Investors have demonstrated contrasting investment behaviors in the Indian market, with 11 stocks from Nifty 500 experiencing consistent selling pressure for 8 consecutive quarters since June 2024, while 65 BSE 500 stocks saw FII stake increases over the last three quarters of FY26. According to analysis of shareholding data from Capitaline as compiled by Business Standard, FIIs net sold stocks worth ₹3.28 lakh crore during FY25 and FY26, while recent data from ACE Equity shows FIIs steadily increasing stakes in around 65 BSE 500 stocks over the last three quarters. The persistent selling spans two financial years, with companies like Eternal and Dr. Reddy's Laboratories among the affected stocks, while 20 stocks delivered over 25% returns in the past year, with nine stocks gaining 50%-115% including three multibaggers that more than doubled investors' wealth.
The most dramatic reduction occurred in PNB Housing Finance, where FIIs lowered their holding by over 70%, from 58% equity stake to 17.2% holdings. Eternal saw its FII holding decline by 40.6% from 56% in March 2024 to 33.3% at the end of March 2026 quarter. Dr. Reddy's Laboratories also experienced a significant decrease, with equity shareholding dropping from 30.2% to 22.1% in the same period. Cyient and KPIT Technologies are among the other stocks where FIIs substantially reduced their stakes. However, recent data shows FIIs steadily increasing stakes in multiple stocks, with Container Corporation of India and Godrej Consumer Products also showing FII buying interest. According to Business Standard, FIIs pared stake in PNB Housing while Domestic Institutional Investors raised their stake substantially from 6.88% in March 2024 to 44.1% in March 2026.
The sustained selling has significantly impacted stock performance, with Cyient and KPIT Technologies declining around 50% each since March 2024. Among the 11 affected stocks, Container Corporation of India and Godrej Consumer Products also slipped over 20% each. However, PNB Housing Finance has surged over 58% despite the FII selling. According to Business Standard, FIIs pared stake in PNB Housing while Domestic Institutional Investors raised their stake substantially from 6.88% in March 2024 to 44.1% in March 2026. Recent FII buying has been observed in stocks like Container Corporation of India, Godrej Consumer Products, and Great Eastern Shipping Company, which have delivered strong returns of 43%-69% over the past year.
According to Kotak Securities, both Cyient and KPIT Technologies are expected to post muted earnings growth ahead. Cyient reported a 2.4% quarter-on-quarter revenue decline in Q4FY26, with analysts cutting FY27-28E EPS estimates by 5-6% due to limited demand visibility. KPIT Technologies has indicated that business performance would be muted in H1FY27, impacted by ramp-downs of two major SDV engagements. SBI Securities notes that the entire IT sector has witnessed valuation de-rating due to likely deflationary impact of AI on business, with money rotating out of traditional IT services towards AI plays. However, recent FII buying in IT stocks like Container Corporation of India and Godrej Consumer Products suggests selective interest in certain IT-related opportunities.
Market analysts attribute the persistent selling to structural challenges across sectors, with SBI Securities explaining that heavyweight sectors like BFSI and IT have borne the brunt of fund outflow, with the money rotating towards AI plays that were absent in India. In the case of Amara Raja, the company reported flattish earnings over the last 3 years due to slowdown in the industrial segment as it shifts from lead acid to lithium battery, with new energy vertical commissioning dragging margins as revenue scales up gradually. However, recent FII buying patterns suggest selective opportunities emerging in sectors like shipping, consumer goods, and infrastructure, with Great Eastern Shipping Company and Container Corporation of India among the stocks showing renewed institutional interest. According to Business Standard, retail investors have increased holdings in 118 Nifty 500 stocks where FIIs cut stake, with 65 stocks trading below March 2024 levels amid tepid market mood.
