Foreign institutional investors have turned smallcap hunters, quietly loading up on seven of this year’s biggest multibagger winners. Within the BSE Smallcap universe, nine stocks have delivered multibagger returns in 2025, and FIIs have strategically increased stakes in seven of them – Force Motors, SML Isuzu, Mangalore Chemicals, Camlin Fine Sciences, Gabriel India, Suven Life Sciences, and Axiscades Technologies.
This accumulation by foreign money in traditionally retail-dominated territory signals that smart money is chasing the same high-octane stocks that have already delivered spectacular gains to early investors.
All seven stocks targeted by foreign investors achieved perfect momentum scores of 5/5, according to analysis by Share.Market, the brokerage firm, which evaluated each stock across five key factors: momentum, value, sentiment, volatility, and quality.
“Known for their disciplined research and selective exposure, FIIs bring not just capital but also stronger governance, improved liquidity, and increased investor attention,” said Om Ghawalkar, Market Analyst at Share.Market. “Their growing presence in smallcap names often precedes broader market interest.”
Live EventsForce Motors emerged as the crown jewel of FII smallcap hunting, with foreign investors boosting their stake from 8.36% to 9.77% as the stock delivered a stunning 157% return in 2025 (till August 1). The automotive component manufacturer scored perfect ratings across key metrics – Momentum (5/5) and Quality (5/5) according to Share.Market’s analysis – though its low Volatility score (2/5) suggests investors should brace for potential corrections after steep rallies.
The stock represents what analysts call a “top performer with excellent fundamentals and strong price action,” making it the perfect poster child for FII confidence in India’s smallcap space.
SML Isuzu follows closely with a 147% surge in 2025, attracting FII stake increases from 15.24% to 15.73%. The commercial vehicle manufacturer offers what experts term a “balanced performer” with perfect momentum (5/5), decent valuation (3/5), and solid fundamentals (4/5), making it best suited for tactical investors entering on pullbacks, according to Share.Market.
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Suven Life Sciences, despite scoring just 1/5 on quality metrics and facing widening losses, saw FII stake more than double from 0.25% to 0.58%. Analysts label it a “high-risk pick suitable only for aggressive investors” despite strong stock momentum.
Similarly, Camlin Fine Sciences attracted significant FII attention with stakes jumping from 1.47% to 2.88%, even though it trades at expensive valuations (1/5 value score) amid profitability concerns.
The FII accumulation pattern reveals calculated moves across diverse sectors:
Mangalore Chemicals & Fertilizers saw FII stake rise from 2.12% to 3.09%, offering strong momentum (5/5) and attractive valuations (4/5) as per Share.Market’s analysis – what the brokerage terms a “value-driven pick with improving fundamentals.”
Gabriel India attracted steady accumulation with FII stake increasing from 5.23% to 5.97%, combining high-quality fundamentals (5/5) with bullish sentiment (4/5), though slightly overvalued in the near term.
Axiscades Technologies witnessed the most dramatic FII interest, with stake nearly tripling from 0.69% to 1.62%, representing what Share.Market describes as a “long-term outperformer with strong growth potential” despite stretched valuations.
Should you follow FII footsteps?
Market experts are recognizing this pattern as a potential investment strategy. “Rising FII stake can be a useful filter when selecting smallcap stocks, but it should not be used in isolation,” notes Ghawalkar. “FIIs typically invest after thorough research, and their increasing presence often signals improving fundamentals, better governance, and higher investor confidence.”
However, he cautions that FII data is reported quarterly and may reflect past interest rather than future trends, with some smallcaps attracting FII attention due to short-term momentum rather than long-term strength.
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Pranay Aggarwal, Director and CEO of Stoxkart, endorses the approach with caveats: “Rising FII stake in smallcap stocks may serve as a valuable filter while identifying potential investment opportunities to some extent. Increased FII interest often signals growing institutional confidence, better liquidity, and potential for re-rating.”
Aggarwal emphasizes the need for comprehensive analysis: “Smallcaps are inherently volatile, and FII flows can be driven by sectoral or macro themes rather than company-specific fundamentals. To use this filter effectively, it must be combined with strong earnings growth, robust financials, sound corporate governance, and sectoral tailwinds.”
“The rise in FII ownership across these multibagger smallcaps is more than a vote of confidence. It’s a sign of institutional readiness to back India’s next-generation growth stories,” concludes Ghawalkar.
The most effective approach, experts agree, is using rising FII stake as a supporting indicator alongside earnings growth, low debt, sector outlook, and price momentum. When multiple signals align, rising institutional interest can add conviction to investment decisions.
As foreign money continues its stealth accumulation in India’s most dynamic market segment, the traditional boundaries between institutional prudence and retail speculation are rapidly disappearing – creating both unprecedented opportunities and new risks for investors willing to follow the smart money trail into smallcap territory.
(Note: Data till August 1, 2025)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)