Goldman Sachs picks these 12 ‘alpha’ stock despite record FII selloff, when will the market turn bullish?

Goldman Sachs has identified 12 Indian stocks as medium-term “alpha” ideas even as foreign institutional investors (FIIs) continue their record exodus from domestic equities, warning that overseas inflows may not return quickly despite easing oil prices, according to an ET report.The brokerage said FIIs have sold $22 billion worth of Indian equities so far in 2026, already exceeding last year’s $19 billion outflow and marking the steepest annual foreign selloff in more than two decades.Since the September 2024 peak, FIIs have cumulatively offloaded about $53 billion from Indian equities, equivalent to nearly 0.9 per cent of listed market capitalisation.“Bulk of foreign selling is likely over,” Goldman Sachs said, while estimating additional downside risk of around $4-5 billion in incremental outflows even if geopolitical tensions such as the Iran conflict persist.The report noted that foreign ownership in Indian equities has fallen to a 14-year low and, for the first time in over two decades, slipped below domestic institutional ownership.As of March 2026, FIIs held around 16 per cent of Indian equities, compared with about 17 per cent held by domestic institutional investors (DIIs).The brokerage said sectors such as banks, real estate, consumer retail and services have seen the sharpest decline in foreign ownership.While foreign investors pulled money out, domestic institutions — particularly mutual funds — stepped in aggressively. Mutual funds now own nearly 11.4 per cent of the Indian market, a record high.The report also highlighted that direct retail participation has moderated, with retail ownership slipping to around 9.2 per cent.Goldman Sachs said falling crude prices alone may not be enough to trigger a strong return of foreign flows into India.“Earnings revisions have become an increasingly important variable guiding foreign flows in Indian equities,” the brokerage said, adding that concerns around earnings downgrades, AI disruptions and relatively expensive valuations versus North Asian markets continue to weigh on investor sentiment.The report said global active funds remain underweight on India by around 220 basis points relative to benchmark allocations.Against this backdrop, Goldman Sachs identified 12 large and liquid Indian stocks where foreign ownership remains relatively light and valuations appear reasonable for medium-term investors.The brokerage’s 12 “alpha” stock ideas are:

“Stocks where foreign ownership and positioning is light, that are trading at reasonable multiples, will likely outperform when foreign sentiment improves,” Goldman Sachs said.The brokerage reiterated its positive stance on financials and consumer staples, saying these sectors are relatively less vulnerable to oil-price shocks and currently trade at historically lower valuations.Goldman Sachs also noted that emerging market and Asia-focused active funds have shifted allocations towards North Asia amid a stronger earnings cycle there, but said any improvement in India’s earnings momentum could eventually drive a meaningful reallocation back into Indian equities.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)