FIIs were more bullish on small-caps last quarter. Check out the stocks they bought

Indian stock indices had scaled new highs last October and tested the levels a month ago, only to see a reversal since then. Lately, benchmark indices had seen a marked correction over fears of monetary tightening and an impending war situation in Ukraine. Now, the markets are consolidating around 5% below the peak level.

Foreign portfolio investors (FPIs), or foreign institutional investors (FIIs), have become more cautious about investing in India but quarterly shareholding data shows they pushed up their holding in over 200 listed companies.

Among the 200-odd stocks, around 143 are small-caps with current market valuation of under Rs 5,000 crore.

This reveals an interesting aspect where FIIs increased their stake in fewer large-caps and mid-caps but pushed up their stake in more small caps. In the previous quarter ended September 30, offshore investors had upped stake in around 100 small-cap stocks.

The small-cap segment tends to have a high beta and tends to swing much more in a volatile market condition.

Offshore investors usually don’t play in this segment as it tends to be below their investment mandate radar. But that doesn’t exclude FII/FPI participation wholly from such stocks. In fact, many investors and analysts try to fish for hidden gems who can be a large cap over the medium to long term.

Check out: Check out the mid-cap counters that saw FIIs increase stake last quarter

Top small-caps

If we consider the larger firms within the small cap space where FIIs increased their stake last quarter, at the top of the heap is Apollo TriCoat Tubes. Formerly known as Best Steel Logistics, the firm makes steel pipes and tubing besides door frames.

In the segment with a market valuation of $500 million or more are companies like Vijaya Diagnostic, ISGEC Heavy Engineering, CSB Bank, Cochin Shipyard, Lemon Tree Hotels, Ircon International, Arvind Fashions and Star Cement that saw buying from offshore portfolio investors.

Lower down the order companies like Share India, Meghmani Finechem, Advanced Enzyme, Tasty Bite Eatables, Dollar Industries, Hawkins Cookers, Dishman Carbogen, CarTrade, IIFL Securities, Valiant Organics, Garden Reach, Solara Active Pharma and MSTC also attracted FIIs.

Notably, Solara Active Pharma had also seen FIIs active in the counter in the previous quarter ended September 30.

Significant picks by FIIs in small-cap pool

If we track stocks where FIIs or FPIs were particularly stoked and bought 2% or more additional stake last quarter we get nine names, half of that in the previous quarter.

These stocks are KBC Global, Fairchem Organics, NTC Industries, One Point One Solutions, Lancer Container, Vijaya Diagnostic, Axita Cotton, Lemon Tree Hotels and Karnataka Bank.

Also read: Categories wise shares which attracted domestic mutual fund in the month of January 2022