Indian large-caps lose foreign ownership as growth divides views

Indian large-caps faced a broad reduction in foreign institutional investor ownership in the September 2026 quarter, with at least 53 companies valued at ₹1 lakh crore or more recording declines. As of October 27, HDFC Bank shares were down 30% for the year and Reliance Industries had fallen 24.2%, although lower foreign ownership did not coincide with losses in every stock.

Key Takeaways

• Foreign ownership declined across at least 53 companies in the ₹1 lakh crore-plus market-value group.
• Some stocks gained despite reduced foreign holdings, showing that ownership changes and returns did not move uniformly.
• Strategists disagree over whether lower valuations compensate for concerns about mature businesses’ growth prospects.

Indian large-caps show uneven returns as foreign stakes shrink

HDFC Bank recorded a 2.43-percentage-point decline in foreign institutional investor, or FII, ownership during the September quarter. Foreign stakes also fell in ITC, Mahindra & Mahindra and Reliance Industries.

Tata Consultancy Services, Bharti Airtel, Maruti Suzuki India, Hindustan Unilever and HDFC Life Insurance were among the other large companies where both foreign ownership and share prices declined.

The ownership figures describe quarterly changes, while the quoted stock returns cover 2026 to date. Those different observation periods do not establish how much foreign selling contributed to any individual share-price decline.

HDFC Bank’s shareholding disclosure archive lists September and June 2026 filings for readers examining its ownership history. The archive page itself does not display the percentages needed to independently verify the size of the quarterly change.

Foreign selling did not produce uniform losses

One97 Communications illustrates the limits of treating a lower foreign stake as a direct signal of stock performance. Its foreign ownership fell 4.57 percentage points, but its shares gained 24% year to date.

Adani Power and Sun Pharmaceutical also delivered positive returns despite reductions in foreign ownership. Sterlite Technologies gained nearly 700% year to date even as its foreign stake declined 1.95 percentage points during the quarter.

The mixed outcomes leave two distinct questions for investors: how foreign investors are changing their allocations, and whether a company’s earnings and growth prospects justify its market valuation.

Growth concerns meet a lower-valuation counterargument

Jimeet Modi, founder and chief executive of Samco Securities, argues that the large-cap universe contains too many mature cash-generating businesses and too little exposure to emerging technologies and innovation. His assessment is a view about future growth, not proof that established companies have lost their ability to expand.

Ashutosh Tiwari, managing director and chief investment officer for public equities at Equirus Asset Management, offers a different emphasis. He says valuations have moderated after nearly two years of relatively flat market performance, improving the balance between potential returns and risks.

Tiwari expects large-caps to benefit if foreign inflows revive because of their liquidity and higher foreign ownership. That remains a conditional outlook rather than evidence that a recovery in flows has begun.

The debate is also sector-specific. HSBC sees a more favorable valuation setup in financials, while warning that lower IT-services multiples reflect weaker growth. Tiwari separately cautions that competition and declining low-cost deposit ratios could keep bank net interest margins structurally below past levels.

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