Key takeaways
- Foreign portfolio investor (FPI) ownership has fallen to multi-year lows in nearly 70 of India’s top 100 listed companies.
- Several major companies, including TCS, HCL Technologies, Maruti Suzuki, Dr Reddy’s Laboratories and Godrej Consumer Products, have seen foreign holdings reach levels not recorded in more than two decades.
- Reliance Industries, Axis Bank, Kotak Mahindra Bank, Trent and DLF are among companies where foreign ownership has fallen to more than 15-year lows.
- The decline has been particularly visible in banking and information technology stocks.
- India’s weight in the MSCI Emerging Markets index has declined from around 20% in 2024 to approximately 11%.
- Foreign investors are shifting allocations towards markets such as Taiwan and South Korea, partly because of stronger technology and AI-related growth opportunities.
- Domestic investors continue to provide support to Indian equities, while foreign investors remain active in selected primary issuances and block deals.
Foreign ownership falls to multi-year lows across India’s largest companies
Foreign portfolio investors have reduced their ownership in a large number of India’s biggest listed companies over the past two years, with holdings reaching multi-year lows in nearly 70% of the country’s top 100 companies.
The decline reflects sustained selling of blue-chip stocks by overseas investors and a reassessment of India’s relative attractiveness compared with other global equity markets.
According to data cited by The Economic Times, foreign ownership has fallen to levels not seen in more than two decades in several prominent companies, including Godrej Consumer Products, Jindal Steel, Maruti Suzuki, Dr Reddy’s Laboratories, Adani Enterprises, HCL Technologies and Tata Consultancy Services (TCS).
Another group of major companies has recorded foreign ownership levels not seen in more than 15 years. These include Reliance Industries, DLF, Bajaj Holdings & Investment, UltraTech Cement, Kotak Mahindra Bank, Axis Bank, Trent, Eicher Motors, Britannia Industries and Shriram Finance.
The trend is particularly significant because these companies represent major parts of India’s banking, technology, automobile, consumer and industrial sectors.
Which companies have seen foreign ownership fall the most?
The decline in foreign shareholding is not limited to a few individual companies. It extends across multiple sectors and market capitalisations.
The Economic Times report identifies three broad groups based on how long foreign ownership has remained at or fallen to historical lows.
| Period of low foreign ownership | Companies |
|---|---|
| More than 20 years | Godrej Consumer Products, Jindal Steel, Maruti Suzuki, Dr Reddy’s Laboratories, Adani Enterprises, HCL Technologies, TCS |
| More than 15 years | DLF, Reliance Industries, Bajaj Holdings & Investment, UltraTech Cement, Kotak Mahindra Bank, Axis Bank, Trent, Eicher Motors, Britannia Industries, Shriram Finance |
| Around 7–8 years | LTM, Power Grid Corporation, SBI Life Insurance, Varun Beverages, HDFC Life Insurance, ICICI Bank, Mahindra & Mahindra, Tata Consumer Products, Cipla, Larsen & Toubro |
| Around 3–5 years | CG Power, Adani Power, ITC, Sun Pharma, Max Healthcare, Eternal, ABB India, Siemens, Tata Motors Passenger Vehicles, Bharat Electronics, HAL, HDFC Bank, NTPC, Cholamandalam Investment, IndiGo |
The data shows that foreign investors have reduced exposure to companies across banking, automobiles, pharmaceuticals, information technology, infrastructure and consumer businesses.
Some companies recorded small increases in foreign ownership during the September 2026 quarter. However, their holdings remained close to historical lows.
Why are foreign investors reducing their exposure to Indian stocks?
The decline in foreign ownership reflects several factors, including relative valuations, earnings growth expectations and the increasing attractiveness of other markets.
1. Global investors are shifting towards AI-focused markets
One of the major changes in global investment allocation has been the growing interest in artificial intelligence and semiconductor-related businesses.
Taiwan and South Korea have attracted investor attention because of their exposure to the global semiconductor and AI supply chain.
India’s weight in the MSCI Emerging Markets index has declined from approximately 20% at its 2024 peak to around 11%.
Taiwan and South Korea together now account for nearly half of the index, reflecting the increased importance of technology-heavy markets in global emerging-market portfolios.
This shift matters because passive funds and index-tracking investors adjust their allocations according to benchmark weights. A reduction in India’s index representation can therefore trigger portfolio rebalancing even without a specific decision to sell an individual Indian company.
2. Earnings growth expectations favour other markets
Another factor is the difference in expected corporate earnings growth.
According to the Economic Times report, the S&P 500 and Nifty 50 were trading at approximately 18–19 times one-year forward earnings.
However, expected earnings growth differed considerably.
| Market | Approximate forward valuation | Expected earnings growth |
|---|---|---|
| S&P 500 | 18–19 times | Around 33% in calendar year 2026 |
| Nifty 50 | 18–19 times | Around 14–15% in FY27 |
These figures suggest that global investors may see better earnings growth opportunities in the US market at broadly comparable forward valuation multiples.
The comparison is not a complete measure of relative attractiveness, since sector composition, currency exposure and earnings cycles differ across markets. However, it helps explain why some foreign investors are reconsidering their allocation to Indian equities.
3. India’s valuation premium is under pressure
Indian equities have historically traded at a premium to many emerging markets because of expectations of higher economic growth, stronger corporate returns and relatively stable business conditions.
However, investors may become less willing to pay that premium when earnings growth slows or competing markets offer more attractive opportunities.
Rahul Bhutoria, director and co-founder of Valtrust Capital, described the decline in foreign ownership as a repricing of growth expectations rather than a complete withdrawal from India.
This distinction is important: foreign investors can continue to believe in India’s long-term economic prospects while reducing the prices they are willing to pay for its listed companies.
Foreign ownership falls even as investors continue participating in new deals
The decline in shareholding does not mean that foreign investors have completely stopped investing in India.
The Economic Times report highlights that the number of Indian companies in which foreign investors hold more than 1% has increased from approximately 900 in 2021 to around 1,300.
Foreign investors also continue to participate in primary share issuances and block deals, even while reducing their exposure in the secondary market.
This suggests that overseas capital is becoming more selective about where it is invested.
Rather than leaving the Indian market entirely, some investors may be reallocating capital between companies, sectors and investment opportunities.
The distinction between foreign ownership and investment flows is also important. Ownership represents the proportion of a company’s shares held by foreign investors at a particular point in time, while investment flows measure purchases and sales over a period.
A company’s foreign ownership can fall because investors sell shares, because new shares are issued and dilute existing holdings, or because changes in market participation alter the ownership mix.
Domestic investors provide support to Indian equities
The reduction in foreign ownership has coincided with a growing role for domestic institutional investors.
Indian mutual funds, insurance companies and other domestic institutions have increased their participation in the equity market, helping absorb some of the selling pressure from overseas investors.
A separate analysis by Motilal Oswal cited by The Economic Times found that domestic institutional ownership in Nifty 500 companies reached a record 21.3% in September 2026, while foreign ownership declined to 16.8%.
Among Nifty 50 companies, domestic institutional holdings increased to 26.2%, compared with foreign holdings of 22.4%.
This change reflects the growing influence of domestic savings and institutional investment in India’s equity market.
However, domestic buying does not automatically remove the concerns that have led foreign investors to reduce their exposure. Sustained foreign participation will also depend on earnings growth, valuations, currency movements and global liquidity conditions.
The Bigger Picture
The decline in foreign ownership across 70% of India’s top 100 companies highlights a significant change in the composition of the domestic equity market. Overseas investors are becoming more selective as they compare Indian valuations and earnings prospects with opportunities in the US, Taiwan and South Korea. The shift towards AI-related investments and changes in emerging-market benchmark weights have added to the pressure on Indian blue-chip stocks.
At the same time, the data does not establish that foreign investors have abandoned India. Their continued participation in primary issuances and block deals, along with the increase in companies where they hold more than 1%, suggests that capital is being redistributed. Domestic institutions are playing a larger role in supporting the market, but a sustained return of foreign investment will depend on competitive valuations and stronger corporate earnings.
Looking Ahead
Investors will monitor upcoming quarterly shareholding disclosures to determine whether foreign ownership begins recovering or continues declining across major companies. Changes in global interest rates, the US dollar, AI-related investment opportunities and India’s earnings growth will remain important factors influencing foreign portfolio allocations.
For Indian companies, the changing ownership structure means domestic institutions may play an increasingly important role in the shareholder base. For the broader market, the key question is whether improved earnings and more attractive valuations can eventually bring sustained foreign buying back into Indian equities.
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