Small investors enter sectors where big money steps out

Though retail investors seem to be betting big on these companies, institutions are fearful

- Mayur Bhalerao

The first quarter of FY26 kicked off with a bang as global tariff threats and geopolitical jitters sent shivers through the markets. While big institutional players turned defensive, some individual investors were busy making audacious moves, picking up stakes in select small-cap and mid-cap counters.

A Mint analysis of 1,335 BSE-listed firms that have disclosed their shareholding details for the June quarter showed that retail shareholding rose in more than 44% (595 firms) of these companies. Of these, 38 stocks saw a simultaneous drop in foreign portfolio investors (FPIs) and mutual fund holdings. Many of these companies operate in sectors such as capital goods, infrastructure, auto components, and pharma.

"The surge in retail inflows into small- and mid-cap stocks in Q1 FY26 reflects momentum chasing, mobile trading access, and online investor conviction even as institutions turned cautious. FPIs and mutual funds shifted to large caps, highlighting a classic late-cycle divergence in sentiment and positioning," said Smit Dasani, research analyst at Invasset PMS.