Foreign institutional investors have been consistently selling shares in 146 Indian stocks for four consecutive quarters, according to an analysis of shareholding data by The Economic Times. The selling spree spans various sectors and market caps, ranging from ITC, India's ₹3.8 lakh crore FMCG giant, to niche mid-caps like Sula Vineyards and Brainbees Solutions (FirstCry). Some of these stocks have lost investors more than half their wealth in a year, while others have delivered double-digit gains despite FII exits. The question for retail investors sitting on these names: is the FII exit a warning, or a contrarian opportunity?
Among the large-caps on the list, ITC stands out with FIIs trimming their holdings from 39.87% in March 2025 to 34.83% by March 2026, a reduction of over 500 basis points in a single year. The stock is down roughly 30% over the past year, making it one of the more painful holds in any large-cap portfolio. Kotak Mahindra Bank has seen FII holdings fall from 31% to 26.4% across the same four quarters, with the stock down 16.8%. IRCTC, once a darling of both domestic and foreign investors, has seen holdings drop from 7.37% to 4.86%, and is down nearly 28%.
The selling pressure in IT has been persistent and driven by structural anxiety. KPIT Technologies, once among the most celebrated auto-tech plays, has seen FII holdings erode from 17.17% to 13.25%, with the stock down 36.87%. LTT Services (LTTS) is down 19.33% over the last year, with holdings falling from 5.19% to 3.86%. HCL Technologies, a large-cap bellwether, has seen FIIs cut from 19.15% to 15.5%, with the stock off 13.17%. The FII selling in 2026 has been largely concentrated in banks, financials and IT stocks, amid the shadow of the Gulf crisis and the threat of AI disruption to the Indian IT services model.
Despite the widespread selling, some stocks have delivered strong returns even as foreign investors reduced their positions. Shriram Finance, one of India's largest retail NBFCs, has seen FIIs cut holdings from 53.58% to 45.13% across every quarter, but the stock has returned 49% over the past year. Eternal (Zomato's parent entity) has had FII holdings fall from 44.36% to 32.61%, yet the stock has returned 11%. Siemens India is up 35% even as foreign investors trimmed from 8.19% to 6.8%. These are cases where domestic institutional investors and retail money appear to be absorbing the FII supply.
The Nifty 50 is flat over the last year, while the midcap index has gained 9% and the smallcap index is up 4%. However, the BSE Small and Midcap 400 Index bounced back sharply in April to its pre-war level of 12,000. According to Nuvama, SMID valuations remain more than one standard deviation rich across metrics, and earnings revival post the supply shock may be muted given the absence of large policy stimulus. Prabhudas Lilladher has responded by reweighting, increasing weights on banks, capital goods, metals and telecom while cutting consumer and auto sectors. The longer-term view from OmniScience Capital is more constructive, with the firm estimating Nifty 50 EPS for FY27 at ₹1,280 to ₹1,320 at P/E multiples of 22 to 24 times, implying a Nifty range of 28,000 to 31,000 by end of March 2027.
