Two years of shareholding data show a broad, patient exit by foreign investors, and a domestic market that has learned to stand on its own.
At the end of September 2024, foreign portfolio investors owned 52.5% of Eternal, the company formerly known as Zomato. By June 2026 the stake had slid to 29.1%, before a partial rebound to 33.0% in the latest filing. It is the deepest retreat in a study of nine quarters of shareholding patterns across the Nifty 50, and it is far from alone.
Of 47 comparable index constituents, 39 saw foreign ownership fall between September 2024 and the latest filing. The average stake dropped from 24.6% to 20.3% of equity, a loss of 4.3 percentage points. In 17 companies, foreigners gave up more than five points. Only eight stocks ended higher, and the biggest gain, at Hindalco, was just 2.2 points. The selling was deep, and the buying was shallow.
A record exit
The stock level picture sits inside the largest foreign withdrawal India has recorded. Net foreign portfolio outflows from Indian equities reached ₹1.66 lakh crore in 2025, a record at the time, beating the ₹1.21 lakh crore of 2022. The current year has been worse. About ₹3.12 lakh crore had left by mid October, nearly double the 2025 figure, with March alone seeing a record ₹1.18 lakh crore go.
Foreigners’ share of Indian equities fell to 14.7% in April 2026, the lowest since 2012. Domestic institutions now own more of listed India, at 18.9%. The Nifty 50 fell 13.9% in 2026 through 9 October, after a modest 10% gain in 2025.
Why they sold
The study points to eight forces. Valuations came first. In September 2024, India traded at roughly a 70% premium to emerging markets, just as foreign stakes peaked. Earnings then lost speed through FY25 and FY26, and estimates were cut, so premium multiples stopped looking earned.
Global money also found a better story elsewhere. The artificial intelligence trade favoured Taiwan and South Korea, where TSMC, Samsung and SK Hynix alone make up 24.3% of the MSCI Emerging Markets index. India’s weight in that index fell from about 19.4% to 11.9%, dropping it from first place to third and forcing passive funds to sell. High US yields, a firm dollar and tariff uncertainty raised the bar for emerging markets generally.
Then came local shocks. The rupee hit record lows beyond 96 to the dollar in 2026, eroding foreign returns. The West Asia conflict that began in February pushed Brent above $100, a painful development for a country that imports about 88% of its crude. Meanwhile, foreign funds put ₹73,583 crore into IPOs in 2025 while selling listed large caps, recycling capital within India rather than adding to it.
The study’s reading is that India lost share on relative attractiveness, not because of a domestic crisis. That matters, because relative trades can reverse.
Who got sold
The heaviest selling hit the stocks foreigners loved most. The ten deepest cuts began with an average stake of 42.2%, now down to 31.3%. Max Healthcare fell from 57.3% to 40.5%. Trent dropped from 26.6% to 15.3%. Axis Bank went from 51.8% to 41.2%, and HDFC Bank from 48.0% to 39.4%. Stocks that began above 30% lost 8.6 points on average, while those under 15% lost 1.3.
The sector split was stark. Pharma and healthcare lost 8.2 points on average, banks 6.9, consumer and retail 6.1, autos 5.4 and IT 4.5. Metals barely moved, at a loss of 0.5, and telecom edged up 0.4. Every one of the eight stocks that gained was a metal, energy, telecom, ports or state bank name: Hindalco, Grasim, Adani Ports, JSW Steel, ONGC, Coal India, Bharti Airtel and SBI. Foreign money rotated from domestic consumption and rate sensitive franchises toward commodities and infrastructure.
It was also persistent, not panicked. Fourteen stocks saw foreign stakes fall in at least seven of eight quarters, and ITC fell in all eight. Healthcare and autos dominate that list. Two waves did most of the damage: December 2024 to March 2025, when 39 and then 38 of the 47 stocks were cut, and March to June 2026, when 33 and 35 were cut. In no quarter did more stocks see additions than reductions.
Reading the numbers with care
A lower foreign percentage can reflect dilution from new share issuance, not selling. Four stocks were excluded from the rankings because their headline numbers mislead. ICICI Bank’s series changed when its ADR depository moved out of the foreign portfolio line in March 2026. Shriram Finance counts MUFG’s strategic stake of roughly 20% as foreign. BSE joined the index on 30 September with patchy history, and Wipro left it. Eight ranked stocks also had their June 2026 filing as the latest available, not September.
The domestic cushion
Someone had to absorb the supply, and domestic institutions did. They bought a record ₹7.72 lakh crore of Indian equities in 2025, driven by monthly SIP flows into mutual funds. In HDFC Bank, domestic institutional ownership rose from 35.3% to 43.6%. In ITC it climbed from 44.6% to 49.8%. Domestic flows now set the marginal price in many Nifty names.
Valuations have adjusted too. The Nifty traded at roughly 20.5 times trailing earnings in August, below its five year median of about 22, and the premium to emerging markets is near a two-decade low.
What could turn it
The September 2026 data offer a tentative signal. Of the 39 stocks filed by 28 October, only 24 showed a cut, the narrowest breadth in the window. That is a hint of fatigue, not a reversal, and it rests on incomplete filings.
The study lists the triggers worth watching: lower US yields and a softer dollar, crude settling below $100, an end to rupee weakness, and earnings follow-through. Nifty 50 profits grew about 18% in the June quarter, the fastest in ten quarters. A cooling of the Korea and Taiwan AI trade could also free up emerging market allocations for India.
With foreign stakes already at multi-year lows in the most heavily sold names, the overhang of potential foreign supply is smaller than it was in 2024. Whether the next move is a pause or a return depends on those triggers. The record so far says the exit was an allocation decision, not a verdict on Indian companies.
