Foreign Institutional Investors (FIIs) have demonstrated a sustained interest in several Indian Public Sector Undertakings (PSUs), increasing their stakes in seven key companies for four consecutive quarters. This consistent buying activity stands out amidst a broader trend of significant FPI outflows from Indian markets, which saw foreign ownership in BSE 500 stocks dip to a 10-year low of 17.3 percent in the September quarter of 2026.
Key PSUs Attracting FII Investment
Among the 12 companies with market capitalization exceeding Rs 50,000 crore that have seen FPI ownership rise for four straight quarters, seven are PSUs. These include:
- Bharat Heavy Electricals Ltd (BHEL): FPI stake rose to 9.94 percent in the September quarter from 6.23 percent a year ago, a 371 basis point increase.
- Oil & Natural Gas Corporation Ltd (ONGC): Foreign investors increased their stake to 8.55 percent in the September quarter, up from 6.98 percent in the year-ago period.
- Life Insurance Corporation of India Ltd (LIC): FPI ownership surged to 1.55 percent from a mere 0.13 percent a year prior.
- Indian Bank: FPI stake now stands at 6.87 percent, compared to 4.68 percent a year earlier.
- Steel Authority of India Ltd (SAIL): Foreign investors held 7.3 percent in the second quarter, up from 3.76 percent a year ago.
- Bank of Maharashtra: FPI stake climbed to 6.5 percent from 2.35 percent a year ago.
- Indian Overseas Bank (IOB): Ownership saw a marginal rise to 0.48 percent from 0.31 percent.
The overall FPI outflows in 2026 alone have amounted to a staggering Rs 2,41,406 crore, marking the highest for any calendar year. Data compiled from corporate database AceEquity underlines these specific increases across the PSU segment.
Market Outlook Amidst Shifting Flows
With November witnessing strong inflows, global investment bank Jefferies anticipates a potential reversal in FPI flows, which could benefit a range of stocks. While the current focus is on PSUs, Jefferies points to large-cap valuations becoming more reasonable, with the Nifty 100 trading 5 percent below its 10-year average at 18.6 times its estimated one-year forward earnings per share (EPS).
The investment bank suggests that India's significantly low beta and higher liquidity make large-cap stocks direct beneficiaries of a sustained revival in FPI flows. Companies like Reliance Industries Ltd, HDFC Bank Ltd, Axis Bank Ltd, Kotak Mahindra Bank Ltd, and UltraTech Cement Ltd are among those identified as potential beneficiaries if this trend continues.