Foreign institutional investors (FIIs) have never owned less of India's biggest companies in two decades and that under-ownership is now colliding with valuations that have fallen below long-term averages, setting up what some fund managers call a stock-picker's contrarian moment.
Average FII ownership across India's top 10 listed companies has fallen to just about 34% of free-float market capitalization, the lowest level in two decades and even below the 37% trough hit during the Global Financial Crisis, according to data from DSP Mutual Fund.
The steady reduction in FII holdings is one of the key drivers behind a broader trend that India's largest companies now account for their smallest share of the overall market capitalization on record, with the top 10 stocks' share of total India market cap down to 17% as of the latest data versus a peak of 39% in December 2019.
