In a remarkable six-month period, 11 smallcap stocks have turned into multibaggers, with returns soaring up to 451% as foreign institutional investors (FIIs) increased their stakes for two consecutive quarters. This trend indicates a growing conviction in select companies rather than a broad-based bet on the smallcap sector.
Sterlite Technologies led the pack with a 451% increase in share price, climbing to ₹518 from ₹94. FII ownership in the company rose significantly from 10.93% in December 2025 to 18.22% in June, marking a cumulative increase of 7.29 percentage points over two quarters. Dee Development followed with a 234% rally, with its share price reaching ₹687 from ₹206, while foreign investors increased their holdings from 0.77% to 2.17% during the same period.
MTAR Technologies also saw substantial foreign accumulation, with shares surging 126% to ₹6,044 from ₹2,672. FII ownership more than doubled to 24.79% in June from 12.24% in December, representing the largest increase among the 11 multibaggers. Acutaas Chemicals attracted sustained foreign buying, with FII ownership rising from 16.67% in December to 21.61% in June, and the stock gaining 113% to ₹3,615 from ₹1,697.
“After their sharp three-month rebound, valuations in this space leave a narrow margin of safety and little room to absorb earnings disappointments.”
Rajesh Palviya, head of research at Axis Direct
Other notable performers include Indo Tech Transformers, which jumped 139% to ₹3,415, and KSH International, which rallied 138% to ₹865. Both companies saw modest increases in foreign ownership. Aeroflex Industries and Sportking India also experienced significant gains, with their share prices climbing 134% and 133%, respectively.
According to Rajesh Palviya, head of research at Axis Direct, "After their sharp three-month rebound, valuations in this space leave a narrow margin of safety and little room to absorb earnings disappointments." He advises selective and measured allocations to mid- and smallcaps while using high-quality largecaps as portfolio anchors.
The recent surge in smallcap stocks comes amid a broader market rally, with 93% of sectors outperforming frontline indices in FY27. However, only 46% of NSE 500 stocks trade above their 200-day moving averages, indicating an uneven market. As the Nifty is expected to return to double-digit profit growth, the market remains range-bound, driven by stock-specific opportunities.
Background
The recent surge in smallcap stocks comes amid a broader market rally, with 93% of sectors outperforming frontline indices in FY27. However, only 46% of NSE 500 stocks trade above their 200-day moving averages, indicating an uneven market. As the Nifty is expected to return to double-digit profit growth, the market remains range-bound, driven by stock-specific opportunities.
Looking ahead, investors should be cautious as valuations in mid- and smallcaps are beginning to test their margin of safety. The next phase of the market will likely be dictated by earnings performance rather than liquidity, as FIIs continue to seek growth opportunities beyond headline indices.
