Why Foreign Investors Are Betting On Mid & Small Caps Over Traditional Large Caps

Foreign portfolio investors have significantly changed their India allocations, reducing exposure to several large-cap stocks while expanding into mid and small caps. Dinshaw Irani, CEO, Helios Capital, explains how foreign investors have redirected capital toward growth-focused companies despite valuation concerns. The discussion looks at how the top 10 holdings’ share of overall India exposure fell from 41% to 21%, while the number of stocks with more than 1% FPI ownership increased substantially. The conversation also examines this shift toward mid and small caps, the search for stronger growth opportunities, and what changing foreign investor allocations could mean for Indian equities and market flows.