Foreign portfolio investors (FPIs) have significantly widened their exposure across Indian equities over the last four years, even as their overall ownership in the market has declined sharply due to persistent selling in heavyweight large-cap stocks, according to a report by ICICI Securities.
The brokerage said aggregate FPI ownership in Indian equities has fallen to nearly 15% currently from close to 20% a decade ago, with most of the reduction taking place after the Russia-Ukraine conflict in 2022 triggered a shift in global investment trends.
However, despite the decline in overall ownership, foreign investors have substantially increased the breadth of their investments in India. The number of stocks in which FPIs hold more than 1% stake has risen from nearly 900 in March 2022 to around 1,300 currently, reflecting broader participation across sectors and market capitalisations.
“The aforementioned trends indicate that FPI investments in India are becoming broad-based driven by growth opportunities. But, the copious selling in the erstwhile concentrated positions is skewing the overall picture,” ICICI Securities said.
The report suggests that foreign investors are gradually moving away from concentrated exposure to traditional benchmark heavyweights and are increasingly positioning themselves in domestic growth-oriented sectors such as manufacturing, healthcare, industrials and financial services.
HDFC Bank, Reliance, Infosys among biggest FPI sells
The sharpest reduction in FPI holdings has been visible in large-cap stocks that historically dominated foreign investor portfolios.
According to the report, the combined contribution of HDFC and HDFC Bank to FPI portfolios declined from 11.6% in March 2022 to 6.9% in March 2026, marking a drop of 4.7 percentage points.
FPIs also sharply reduced exposure to Reliance Industries, where portfolio contribution fell from 9.1% to 5.3% during the same period.
Similarly, holdings in Infosys declined from 5.8% to 2.1%, while exposure to Tata Consultancy Services dropped from 4.2% to 1.3%.
Other major reductions were seen in Kotak Mahindra Bank, where holdings contribution declined from 3.1% to 1.5%, and Asian Paints, where exposure fell from 1.2% to 0.4%.
Overall, stocks that contributed 40.9% to FPI portfolios in March 2022 now account for only 21.3%, indicating a sharp reduction in concentration risk within foreign portfolios.
At the sector level, financials witnessed the highest FPI selling since 2022, with net outflows of ₹1.8 trillion. IT and hardware companies saw outflows of ₹1.6 trillion, while the energy sector recorded selling worth ₹1 trillion.
Consumer discretionary, FMCG and healthcare sectors also witnessed significant foreign investor selling during the period.
Paytm, Polycab, Max Healthcare emerge top FPI bets
While FPIs reduced exposure to several large-cap index heavyweights, they simultaneously increased investments across multiple emerging businesses and domestic growth-oriented sectors.
Among large-cap companies, foreign investors sharply increased holdings in Eternal from 10.4% in March 2022 to 30.8% in March 2026.
FPIs also raised stakes in HDFC Asset Management Company from 10.4% to 24.5%, while holdings in Polycab India climbed from 5.8% to 18.2%.
In the mid-cap segment, FPIs significantly increased exposure to Max Healthcare Institute, where holdings rose from 14.6% to 45.4%.
Holdings in One 97 Communications, the parent company of Paytm, surged from 4.4% to 24.3% during the same period.
The trend extended to smaller companies as well. FPIs increased stakes in TD Power Systems from 2.1% to 26.7%, while exposure to Home First Finance Company India rose from 10.9% to 45.7%.
“Foreign investors are increasingly positioning themselves in sectors linked to domestic growth, manufacturing, healthcare, industrials and financial services rather than maintaining concentrated bets on traditional index heavyweights,” ICICI Securities said.
Despite the broader diversification trend, FPIs continued to remain net sellers in Indian equities during 2026.
According to the report, FPIs pulled out ₹60,900 crore from Indian equities in April 2026 alone. Financials witnessed the highest selling at ₹30,900 crore, followed by consumer discretionary, healthcare, energy and automobile sectors.
So far in calendar year 2026, FPIs have withdrawn nearly $21.7 billion from Indian markets, extending the selling trend seen in calendar year 2025, when foreign investors pulled out $18.8 billion from equities.
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