4 Smallcap Stocks That Caught the Eye of FIIs and DIIs in March 2026 – Stock Insights News

However, they also offer strong growth potential compared to the large-cap and mid-cap stocks, making them attractive to investors looking for higher returns.

Recently, small-cap stocks have been beaten down. This has led to growing interest from both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), who have started increasing their stakes in select companies.

This indicates confidence in their underlying fundamentals and growth prospects.

Let’s look at 4 small-cap stocks that have seen buying from FIIs and DIIs in 4Q FY26.

Which Smallcap Stocks Are FIIs and DIIs Buying?

#1 KSH International Ltd

First on the list is KSH International Ltd.

KSH International Ltd is the third-largest manufacturer and the largest exporter of magnet winding wires in India. 

The company produces standard and specialised magnet winding wires used in transformers, motors, alternators, generators, EV traction motors, appliances, railways and power T&D equipment.

It supplies to leading OEMs in India under the brand ‘KSH’.

The company exports its products to 24 countries, including the US, UAE, Spain, Oman, Germany, Japan, and more.

Domestically, it has a strong presence across major transformer and motor OEMs in India.

In the March 2026 quarter, the company has seen an increase in both DIIs and FIIs holding.

Source: Equitymaster

Currently, the EV sector is growing fast, supported by government incentives and the push towards cleaner energy. As EVs depend heavily on motors and electrical systems that use magnet winding wires, demand for these wires is also rising.

As the company is one of the main producers of magnet winding wires in India, this could be one of the reasons why FIIs and DIIs are increasing their stakes.

Going forward, the company will focus on higher-value products, launch new offerings, and expand its presence in global markets. It also aims to grow the business from existing customers, improve efficiency through scale, and become a more reliable partner for its customers.             

Also, it aims to diversify revenue streams, enhance competitive positioning, and drive sustainable, margin-accretive growth. 

Additionally, its shift towards EVs will contribute significant growth to winding wire consumption.

#2 Jana Small Finance Bank

Next on the list is Jana Small Finance Bank. 

Incorporated in 2006, Jana Small Finance Bank Ltd provides a wide range of banking and financial services. 

It provides home loans with multiple product offerings and special benefits, including pre-approved business loans, gold loans, linked savings/current accounts, 2-wheeler loans, and health insurance. 

DII and FII shareholding in Jana Small Finance saw an increase in the March 2026 quarter.

Source: Equitymaster

Since the September quarter, the FIIs have been constantly increasing their stake in the bank. 

Jana Small Finance Bank also delivered its best performance in the last 18 months. This continued in January 2026, supported by growth in affordable housing loans, gold loans, and auto loans.                                      

Moving forward, the bank’s 85% unsecured book will be covered under a guarantee scheme by March 2027.

On the liability side, the deposit franchise continues to remain stable, with improving granularity and a steady reduction in cost of funds. It also maintains a strong capital base and healthy liquidity position, which provides sufficient flexibility to support future growth opportunities.

Jana Small Finance Bank remains confident of delivering improved performance over the coming quarters, backed by a well-diversified balance sheet, disciplined execution, and a clear focus on sustainable profitability rather than short-term volatility.

#3 VST Industries

Next on the list is VST Industries.

The company is engaged in the manufacture and trade of cigarettes, tobacco, and tobacco products.

It’s the third largest player in the domestic cigarette market, with a significant presence in West Bengal, Andhra Pradesh, Telangana, Bihar, and UP. Its cigarette brand Total is among the top 10 brands in the industry.

From December 2025 to March 2026, FIIs boosted their stake, from 1.22% to 1.34%. At the same time, DIIs increased their holdings from 6.31% to 6.63%.

Source: Equitymaster

This increase can be linked to the fact that in February 2026, cigarette companies, including VST industries, announced a price hike of 20% to 40% due to a rise in excise duty on cigarettes and tobacco products.

As per media reports, this strategy is expected to lessen the impact on earnings, reducing the EBIT decline to only 2%, compared to earlier estimates of 8% to 15%. 

Going ahead, the company has outlined a sustainability and growth objectives as part of its “Roadmap 2030.” It plans to incorporate 50% renewable energy into its overall energy mix by FY30.                 

It aims to transition its entire fleet, comprising both owned and third-party vehicles, to EVs by 2030.

On the growth front, VST Industries continues to expand its brand portfolio, concentrating on both the mainstream premium and emerging segments.

It’s also supporting socio-economic growth throughout its value chain with programs that help tobacco farmers.

#4 Repco Home Finance

Last on the list is Repco Home Finance Ltd.

Repco Home was incorporated in 2000 as a subsidiary of Repco Bank, with its corporate office in Chennai. The company offers housing loans to salaried and self-employed individuals.

The company also offers loans against properties under products like prosperity loan, new horizon loan, and commercial real estate loan.

It has a long history in housing finance and an established franchise in South India, particularly in tier II and tier III cities.

Recently, DII and FII shareholding in Repco Home Finance saw an increase in the March 2026 quarter.

Source: Equitymaster

FIIs boosted their stake from 12.6% to 13.37%. At the same time, DIIs increased their holdings from 23.74% to 24.27%.

Going forward, Repco Home’s ability to achieve and sustain significantly lower delinquency levels, similar to its peers, would be crucial.

It’s revamping IT systems and making improvements to its end-to-end solutions, mobile app for collections, field investigations, sourcing, and API-based verification.

Conclusion

When both domestic and foreign investors are buying, it often shows confidence about the company’s strength, growth, and stability. 

However, this does not guarantee that the stock will give good returns in the future.

Small-cap stocks offer long-term growth potential if the company grows successfully, but they come with higher short-term risks. This makes risk management especially important in this segment. 

It’s important to look closely at the company’s earnings potential, how it compares with others in the sector, and whether its current stock price is reasonable, rather than just following the moves of big investors like FIIs and DIIs.

Investors should carefully evaluate these companies’ fundamentals, corporate governance, and valuations as key factors when conducting due diligence before making investment decisions.

Happy investing.

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