Behind India's Rs 5.5 lakh crore FII selloff lies a hidden list of 84 multibagger winners

Foreign institutional investors have pulled out a staggering Rs 5.5 lakh crore from the Indian stock market since September 2024, dumping heavyweight banking and financial stocks the hardest. But buried beneath this exodus is a counter-narrative that few are talking about: a list of 84 stocks that have delivered multibagger returns over the past two years and FIIs have actually been raising their stakes in every single one of them since September 2024.

Midwest Energy tops the list with a 19,859% two-year return, alongside an FII stake that went from zero in September 2024 to over 12% by March 2026. Sumeet Industries delivered a 6,376% return, while CIAN Agro and Colab Platforms returned over 3,000% and 2,200% respectively — all stocks where foreign investors built positions from scratch, shows data from ACE Equity.


Among the more widely-tracked names, GE Vernova T&D India saw FII holding surge from 6.82% to 20.39%, a jump of over 13.57 percentage points, while delivering a 216% two-year return. Hitachi Energy India saw a similar pattern, with FII stakes rising from 5.10% to 11.68% alongside a 217% return. TD Power Systems' FII holding nearly doubled, from 16.24% to 26.69%, on the back of a 220% return. MTAR Technologies saw FII stakes more than double from 7.81% to 17.31%, returning 254% over two years.

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Sterlite Tech, a name closely watched by retail investors, saw FII holding rise from 8.36% to 11.47% with a 339% two-year return. Apollo Micro Systems recorded one of the sharpest stake increases from 0.19% to 3.64% alongside a 270% return. Sky Gold's FII holding rose from 0.25% to 1.20%, delivering a 304% return. Wockhardt's FII stake edged up from 6.69% to 7.08% with a 225% return, while Aeroflex Industries saw holdings climb from 0.13% to 1.49% alongside a 185% return. Paras Defence And Space Technologies, riding the defence theme, saw FII stakes rise from 3.46% to 5.06% with a 121% return.

Smallcaps, midcaps new FII favourites in India?

The pattern raises an uncomfortable question for the bears: if FIIs are selling India broadly, why are they simultaneously building positions in dozens of mid- and small-cap names that have multiplied investor wealth?

"Don't base the market solely on whether FIIs come back. They come when their cycle turns," Nippon India Mutual Fund's Equity CIO Sailesh Raj Bhan told ET Markets. He pointed out that despite years of selling, "FII selling has been going on for years and valuations haven't collapsed — that tells you something." According to Bhan, the real question investors should be asking is why anyone would put money into India at all — and the answer, he said, lies in the "longevity of growth," with India offering an "11%+ compounding nominal GDP growth construct" built on 6-7% real GDP growth sustained over 15-30 years.

Bhan added that markets are likely to move ahead of FII flows, not the other way around. "My personal view is that markets will rise before FIIs come back. They need a trigger too — earnings visibility," he said, noting that this visibility remains low currently due to elevated oil costs. His advice for the year ahead: "use this year to accumulate... in the third, fourth, and fifth year you make bigger money." He noted valuations have already de-rated "from 20–22x P/E to 18x" and are unlikely to fall much further, with the only real overhang being a sentiment shift "from extreme euphoria to extreme pessimism."

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What should investors do?

BofA Securities India MD and Head of Research Amish Shah offered a sector-wise roadmap built around three buckets. On valuations, he said large private banks and PSU banks stand out as "beaten down beyond what's justified," while flagging caution on mid-sized private banks exposed to commercial vehicles, microfinance and MSMEs, which he called "pockets of stress near term."

On growth, Shah's team favours consumer discretionary themes — jewelry, travel and tourism, and quick commerce — along with data-centre-linked plays in cables, wires, transformers and gensets, plus non-ferrous metals like aluminium and copper riding the global AI capex cycle. His third bucket centres on policy bets, especially energy security, the biofuels ecosystem, electrification-linked power companies, and shipbuilding — a sector he believes India is positioned to capture as China, Korea and Japan, which together "hold 92% of global market share," face an ageing workforce problem.

Morgan Stanley's Ridham Desai struck a similarly constructive note on earnings. "We think India earnings are once again in the throes of an upcycle," he said, though flagging risks from "prolonged strife in the Middle East and a severe drought due to bad weather in the coming summer sowing season." Desai expects "investments to GDP to rise to 37.5% in the coming five years," driven by capex across energy, defence, semiconductors, fertilizers and data centres.

Morgan Stanley is overweight financials, consumer discretionary and industrials, underweight energy, materials, utilities and healthcare, and flagged IT services as a potential "dark horse as the world pivots to these companies to build AI applications and solutions."

For now, the FII selloff dominates headlines but the quiet accumulation across 84 multibagger names suggests foreign money hasn't abandoned India but simply rotating.

(Data: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)