Institutional Investments Rise in Microcaps Amid Market Volatility and Sectoral Growth

In Q3 FY26, domestic institutional investors increased stakes in select microcap stocks despite broader market declines, signaling confidence in growth potential. India's capital goods sector showed robust growth driven by energy, renewables, defense, and rail, supported by public capex and export demand. Thematic mutual funds focusing on commodities and multi-sector themes delivered strong returns. Meanwhile, market volatility rose with Nifty declining nearly 3%, prompting cautious investor sentiment. Mutual funds adjusted portfolios by adding banking and pharma stocks while reducing exposure to some financial services and logistics firms.