Retail Investors Steady, But FIIs Key To Market Surge: TRUST Mutual Fund’s Mihir Vora

The Indian stock market has shown remarkable resilience, driven primarily by steady retail investor participation rather than foreign institutional investor (FII) inflows. This trend, according to Mihir Vora, CIO of TRUST Mutual Fund, has minimised the risk of excessive selling in the future. Speaking to NDTV Profit, Vora mentioned that while domestic investors have consistently bought into market corrections over the past five months, FIIs have been net sellers during the same period. However, a potential shift in FII sentiment could act as a strong catalyst for market momentum.

“All I'm thinking is that even if the FIIs' selling reduces or stops, and even better if it reverses, then we can have big leg-ups. You may have seen that for maybe the second or third time in twenty years, FIIs are, in general, underweight in India in the global allocation. If India starts to demonstrate, then we can have a big move from the FIIs if they start buying,” Vora said during a conversation with NDTV Profit.

Vora attributed the recent market correction to government spending cuts, tight liquidity conditions and a stronger dollar. He expected a reversal in these factors and highlighted a 20% reduction in government capital expenditure anticipated in Q2 FY26.

“Government spending will now positively impact us in the June and September quarters because of a 20% reduction in capital expenditure spending by the government. This means we have a very good low base to work on. So, my guess is that, optically, GDP growth and revenue growth for many corporates will look better in the June and September quarters. And that's what the market typically looks at,” Vora explained.

Referring to China's strength in technology, Vora expressed his preference for Indian corporations to invest more in emerging technologies rather than traditional industries.

He cited the example of China's DeepSeek, which recently made international headlines and impacted US tech stocks as it competes with AI platforms like ChatGPT.

Vora remained unenthusiastic about large-cap IT companies, citing their lack of investment in transformative technologies that could enable non-linear growth. Instead, he sees potential in midcap and smallcap IT firms.

“In the midcap IT or IT-enabled space, there are companies with unique business models. Some of them are providing services to medical companies, while others cater to insurance firms. So in the midcap and smallcap space, you can pick and choose because they have specific business models,” he said.

Looking at the financial sector, Vora anticipates improved topline growth and margins in the coming fiscal year. “Over a one-year view, both banks and NBFCs should do well. If we are going to achieve a 6.5% GDP growth rate, we can't have credit growth at 11%. Credit growth has to increase. So that's the bet we are taking—that we are back on the growth path, and it should go back to at least 12%, 13%, 14% in FY26,” he said.