A study reveals that a select group of foreign portfolio investors outshone India’s benchmark indices in the June quarter, highlighting the importance of stock picking amid global uncertainty and sectoral shifts.
In a quarter when Indian equities were swinging sharply on geopolitics, oil-price shocks and uncertainty over global rates, some of the biggest foreign portfolio investors managed to beat the market by a wide margin. A Prime Database study found that in the June quarter, at least 75% of the top 20 foreign portfolio investors saw the value of their India holdings rise by 10% to 37%, a gain that outpaced the headline returns from the Sensex and Nifty. The showing underlined how much returns in India can diverge between index investors and stock pickers.
That performance came even as overseas investors were broadly cautious. Livemint reported that foreign portfolio inflows into Indian equities were modest in the first half of 2024 at ₹3,201 crore, before jumping to ₹26,565 crore in June as sentiment improved. ICICI Direct said full-year 2024 equity inflows were weak overall, with valuations and geopolitical tension prompting a pullback, even though debt attracted large foreign inflows. The contrast suggests that while broad FPI appetite was uneven, a smaller group of active managers stayed invested and benefited from sharper stock selection.
The gains were helped by the fact that the sell-off hit index-heavy sectors such as banks and information technology, while many mid-cap, small-cap and newer-age businesses held up better. Keur Majumdar of Bay Capital told The Economic Times that funds with stronger picks in the wider market tended to outperform. That included names such as Capital Group, Fidelity, Goldman Sachs, GQG Partners and several other large foreign managers whose portfolios, according to market trackers, held up better than the benchmark.
The broader market backdrop also helped explain why stock selection mattered so much. In the quarter, the Sensex rose about 6.3% and the Nifty 6.8%, but the BSE Mid-Cap 150 gained 17% and the BSE Small-Cap 250 climbed 24.5%. By comparison, several Asian markets delivered even bigger dollar returns, with Taiwan and South Korea surging before later cooling as artificial intelligence-linked trades faded. For domestic investors, the lesson is simple: in a volatile market, the index may tell only part of the story.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
