Sustained selling in recent years has offset the cumulative money FPIs had added to the market over the previous ten years, leaving their net position flat.
“The only missing link, as we all know, in the last two and a half years has been the flows. The FII selling has been massive. We are all aware about the numbers. In fact, on a decadal basis, they’ve become neutral now. In the last 10 years, cumulative flows of FII is zero now. They’ve bought $69 billion in primary market, and they’ve sold exactly $69 billion in secondary market,” Duggad told CNBC-TV18 at a curtain-raiser for the 22nd Motilal Oswal Annual Global Investor Conference, set to open on August 17.
National Securities Depository Ltd (NSDL) data cited by Bloomberg also shows that cumulative net FPI equity investments stood at around ₹7.3 lakh crore as of June 1 — the lowest level since 2016. The NSDL figures track annual net investments and withdrawals by foreign portfolio investors since 1993.
Duggad flagged the flat decadal number as the missing piece behind India’s stock market cycle. He added that a reversal here could give the market its next push: “So as and when that changes, you will see another tailwind coming in for the markets.”
Duggad noted that the April-June 2026 quarter marked the best stretch for corporate earnings in three years, on quality, size and spread. Across 350 companies tracked by the brokerage, excluding oil marketing companies (OMCs), earnings grew 23% against an estimate of 15%, while revenue for the Nifty rose 18%, ahead of a 10% forecast. “I have not seen a 20% plus earnings growth for the last 12 quarters now,” he said.
Smallcap companies under the firm’s coverage delivered 32% earnings growth in the quarter, already matching the 30% full-year estimate set at the start of the year. Midcaps grew 25%. Duggad said the firm tracks 180 smallcap names and 31 broad sectors; of those sectors, 20 beat expectations, 9 were in line, and 2 fell short.
The strong show has led Motilal Oswal to raise its full-year earnings growth forecasts to 15% for the Nifty, 22% for midcaps and 30% for smallcaps, up from 14%, 21% and 30% projected earlier in the year.
Duggad noted that Nifty earnings per share (EPS) moved from ₹1,000 in FY24 to ₹1,065 in FY26, a cumulative rise of 6% over two years, against a 5% rise in Nifty market capitalisation, from ₹181 lakh crore to ₹192 lakh crore, in the same period.
Why the index has stayed range-bound
Rajat Rajgarhia, Whole-time Director & CEO, Institutional Equities at Motilal Oswal Financial Services, said the Nifty has moved within a roughly 3,000-point band over the past two-three years despite sharp swings on both sides, tied to two recurring forces on either end. “The retail money, the domestic money, will keep coming in, not letting the market go down, and the primary market will keep supplying paper, not letting the market go up,” he said.
Rajgarhia added that a wave of new listings, including large asset managers, exchanges and telecom firms, is broadening the market and expanding retail participation, with demat accounts rising from 2-3 crore to 25 crore.
He also linked the pace of share sales to credit growth. “When you look at the credit growth today at 18%, it needs to be supplemented with an equity capital market, because for all the capex that we are beginning to see to happen, you need equity contribution to come,” he said.
Where Motilal Oswal is positioned
Duggad said the firm has moved roughly 700 basis points of model portfolio weight from largecaps to midcaps and smallcaps, concentrated in consumer discretionary, autos, non-bank financials and industrials.
Within financials, the preference is for non-bank lenders and capital market plays over traditional banks. In consumption, Motilal Oswal cut its FMCG weight to zero two years ago and moved that allocation into discretionary names.
In industrials, the firm favours power, transmission, defence and electronics manufacturers such as Dixon Technologies over legacy benchmark names in the sector. In technology, coverage has shifted toward newer technology businesses rather than large legacy IT firms.
In healthcare, Duggad pointed to CDMOs, hospitals and diagnostics chains as the source of returns going forward, noting that the five largest generic pharmaceutical companies compounded earnings at 7% and market capitalisation at 8% over the past decade.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
