- Foreign investors are diversifying beyond top Indian stocks into broader sectors like energy and healthcare
- FII holding in India’s top 50 stocks fell from 40% to 20% over the past three years
- Foreign investors now hold stakes in nearly 1,300 to 1,400 Indian companies, up from 900
Foreign institutional investors are no longer concentrating their India bets in a handful of heavyweight stocks. Instead, they are spreading their money across a much broader set of companies, with sectors such as energy, healthcare and new-age businesses emerging as key beneficiaries, according to Gurmeet Chadha, Managing Partner & CIO, Complete Circle.
Speaking to NDTV Profit, Chadha said the composition of foreign ownership in Indian equities has changed significantly over the past three years as global investors search for stronger earnings growth. “If you see FII holding in India, the top 50 stocks' weighting has gone down from 40% to 20%,” he said.
That reduction has come largely from traditional market favourites such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Reliance Industries and major information technology stocks.
According to Chadha, FIIs are increasing the breadth of their India exposure. Their holdings, which were once spread across around 900 companies, now extend to nearly 1,300 to 1,400 stocks. “They have added a lot of energy stocks,” he said, pointing to names such as Polycab India and GE Vernova T&D India. He also highlighted increased allocations to healthcare companies and digital businesses such as One 97 Communications and Eternal.
The common thread, Chadha said, is growth. Investors are favouring sectors and companies where earnings visibility is stronger and less dependent on cyclical recoveries.
Large private sector banks have lagged this shift, even as many trade at attractive valuations relative to their own history. But Chadha believes that could change if global capital starts rotating away from artificial intelligence-linked trades in markets such as South Korea and Taiwan. “With the Korean market softening and the AI trade getting stressed, maybe at some point the flows will shift,” he said.
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