The last few times have been very volatile for the Indian stock market. The record-breaking mega sell-off of Rs 5.5 lakh crore by foreign investors (FIIs) from the Indian equity market shook Dalal Street. There was noise everywhere about falling indexes and sinking money of investors. But, even amidst this fierce financial storm, there was a secret parallel story going on within the Indian market, which has surprised everyone. According to the report of ET, behind the noise of this all-round recession and record selling, there were 84 such ‘hidden heroes’ who not only survived, but also made the investors rich by giving them lavish multibaggers.
Foreign investors sold Rs 5.5 lakh crore
Due to uncertainty in interest rates at the global level, geopolitical tension, diversion of funds towards markets like Taiwan and South Korea, foreign portfolio investors (FPIs/FIIs) sold the Indian stock market all the way. This amount of Rs 5.5 lakh crore withdrawn by foreign investors is one of the biggest sell-offs in Indian corporate history. Normally such a huge selloff would completely crash the market, but the unwavering confidence of domestic investors and India’s retail investors gave a strong safety net to Nifty and Sensex.
’84 champion who defeated the storm of recession
When FIIs were exiting by selling big and large-cap stocks, 84 stocks from mid-cap and small-cap segments created history on the basis of domestic money flow and strong fundamentals. According to market experts and data analysis, these 84 stocks were such that their earnings growth was very strong and their business model was not at all affected by external or global shocks. While large institutional investors were selling, savvy domestic funds and retail investors started increasing their stake in these select value stocks. These 84 multibagger winners mainly include companies from defence, infrastructure, renewable energy, domestic manufacturing and data center sectors, which are directly benefiting from government capex and domestic consumption.
The inside game of market crashes: FII sell-off versus hidden treasure
| Market Dynamics | Impact of FII mega-selloff | Performance of 84 multibagger stocks |
| flow of funds | Unprecedented withdrawal of Rs 5.5 lakh crore from Indian market | Liquidity remained in these stocks due to investment by domestic funds (DIIs). |
| return profile | Many heavyweight stocks of Nifty and Sensex fell by 15% to 25%. | These 84 stocks gave bumper returns ranging from 100% to 300% even in difficult times. |
| core driving sector | Banking, IT and Global Commodities (where FII stake was higher) | Defence, Railways, Semiconductor, Specialty Chemicals and Green Energy |
Big lesson for retail investors
The ET report quoted market experts as saying that this data proves that selling by foreign investors is not always a sign of the end of the market. According to experts, when the headlines are screaming that ‘the market is sinking’, then the real opportunities are being created in the quiet quality mid and small cap stocks. At the same time, shares of companies whose order book is strong and whose debt burden is less, make their own way despite any global selloff.
The outflow of capital worth Rs 5.5 lakh crore from the Indian stock market was certainly a major macro-economic shock, but this ‘dark period’ of the market itself gave birth to 84 new multibagger stars. This is strong evidence that the domestic growth engine of the Indian economy has now become so self-reliant that it can easily absorb the selling pressure of global giants and create new winners.
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