Q4 shareholding moves: Institutional appetite for post-correction mid-caps grows

Mint

05-05-2025

Did the recent correction in mid-cap stocks offer a chance to buy the dip or a cue to exit? The answer depends on whom you ask. A
Mint
analysis of March-quarter shareholding patterns reveals a sharp divergence: while domestic institutional investors stepped up their bets, retail investors pulled back, hinting at a growing divide in confidence.
The analysis of 129 mid-cap companies shows that retail investors trimmed their holdings in 74 firms—57.4% of the sample—while increasing stakes in just 51 (around 40%). Mutual funds moved in the opposite direction, using the correction to selectively build positions, raising exposure in about 60% of the mid-cap stocks and cutting back in roughly a third.
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Foreign portfolio investors (FPIs) also leaned cautious, reducing holdings in 55% of these companies, while raising stake in 43%—a sign of selective conviction rather than broad-based retreat.
The mid-cap segment weathered the recent correction with only a moderate dip in valuations. The BSE Midcap index is currently trading at a nearly 7% discount to its historical average price-to-earnings (P/E) ratio, suggesting some headroom in quality names—even as broad-based value remains elusive.
'Concerns have somewhat reduced, making these segments moderately more attractive. The Nifty MidCap 100 index is at 38.9 times, compared to 44.9 in September 2024," said Utsav Verma, head of research, institutional equities, Choice Broking.
Echoing this cautiously optimistic view, Abhishek Dua, co-founder of Showroom B2B, in
Mint's
recent market survey highlighted that valuations have cooled off a bit after the recent correction. 'Some quality names in the mid-cap space are now worth looking at, but investors still need to be selective."
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However, others remain wary of lingering overvaluation.
'While recent market consolidation has provided some relief, valuation concerns in certain mid-cap segments still remain," said Ajit Mishra, senior vice president, Research at Religare Broking. 'Many stocks in these categories had run up sharply, driven more by liquidity and sentiment than fundamentals. Despite the pullback, prices in several cases still appear disconnected from earnings growth potential, keeping risks elevated."
'We are increasingly focusing on quality and fundamentals, and any further global or domestic trigger could expose the fragility in overvalued names. Hence, caution is still warranted, and a selective approach remains essential," Mishra added.
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Meanwhile, retail investors remained the most cautious cohort overall, with their aggregate shareholding in mid-cap firms dropping 40 basis points—from 11.2% in Q4FY24 to 10.8% in Q4FY25.
Overseas investors also pared their stakes marginally during the quarter, after holding steady for the previous three. Domestic mutual funds, meanwhile, emerged as the most bullish cohort—raising their ownership by a sharp 90 basis points over the past year.
This is the fifth part of a series of data stories on the latest shareholding pattern. Read the
first
,
second
,
third
,
and
fourth
part here.