RailTel, NBCC to Zee Entertainment: FPIs, MFs raised stakes in these 60 small-cap stocks in Q1. Do you own any?

Small-cap stocks: Some 60 small-cap stocks caught the eyes of both mutual funds and foreign portfolio investors (FPIs) during the recently concluded June quarter. Often labelled as “smart money”, the buying trends of MFs and FPIs hold the key for retail investors, especially in their preferred small-cap segment.

Interestingly, 54 of these 60 small-cap stocks have delivered positive returns since April, gaining up to 60%.

Small-cap stocks favoured by MFs, FPIs

KFin Technologies saw FPI stake in the company grow from 22.96% to 28.31%, recording a 5.35% increase in stake, while MFs raised their stake in the stock by 3.28%, according to Capitaline data.

Meanwhile, in Aptus Value Housing Finance, the MF stake jumped by 6.16% to 16.04% as of the June quarter. At the same time, FPIs lapped up 2.74% stake in the stock. In less than four months, Aptus Value Housing Finance shares are up 12%.

Also Read | Will smallcaps rebound in H2 2025 after underperforming in H1?

Sagility, Zee Entertainment, Angle One, PG Electroplast, Niva Bupa Health, Usha Martin, and Manappuram Finance are among those stocks where FPIs have raised their stakes by over 1% during the quarter under review. At the same time, barring Manappuram, MF stake in these companies has also jumped by over 1%.

PG Eletcroplast has been the only stock among these that has failed to gain in the financial year 2025-26 (FY26), while others have jumped up to 20%, with Zee Entertainment leading the gains.

Meanwhile, Authum Investment, which saw a 0.54% increase in FPI stake and 0.06% in MFs’, has been the best-performing stock during this period with a 63% rally. CCL Products has been another top performer, up 54%, which has seen smart money flowing in during Q1. FPI stake rose by 0.26% while MF stake rose by 0.32%.

EID Parry, Anand Rathi, Laurus Labs, Pfizer, LT Foods, FACT, Data Pattern and Engineers India shares have rallied up to 30-50% amid stake raise by the institutional investors.

Also Read | PNB Housing Finance share price crashes 17% as MD and CEO resigns

Are small-cap stocks a good buy?

Despite strong institutional interest, domestic brokerage Nuvama Research is wary of small-cap and mid-cap stocks.

The brokerage said small-cap index has bounced back almost 20% from April lows amid earnings downgrades and continuing economic slowdown. “This has led to an unprecedented wedge between growth and valuation—with the BSE500 median PE at 40x while trailing median earnings growth is just 9%,” it said.

“Essentially, earnings revival is necessary to incentivise buyers. With margin tailwinds behind and demand weak, earning recovery will entail a fresh round of easing. It must begin with the Fed as DXY weakness so far has not been reflationary (link), complemented by domestic fiscal as well as monetary expansion,” it added.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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