The divide between domestic and foreign institutional investments in Indian equities has grown to its widest in 25 years, highlighting a clear shift in market participation .
As per ET, domestic institutional investors (DIIs) now hold 18.26% of all NSE-listed companies, an increase of 44 basis points in the September quarter — their highest level on record since 2009.
Meanwhile, foreign ownership fell 34 basis points to 16.71%, its lowest in 13 years.
According to ET, DII holdings first overtook foreign portfolio investors (FPIs) in the March quarter and the gap has widened since then. Local institutions, supported by steady inflows from retail investors , continue to invest aggressively, while foreign fund managers have scaled back amid global uncertainties and stretched valuations.
“The widening gap between FII and DII holdings indicates the ‘retailisation’ of corporate India,” said Siddarth Bhamre, head of research at Asit C Mehta Intermediates, as quoted by ET.
He noted that retail investors drive most mutual fund flows, while institutional participation largely comes through trusts and family offices.
Driven by record monthly inflows through systematic investment plans (SIPs), mutual funds ’ share in listed companies rose to an all-time high of 10.9%, up from 10.56% in the June quarter.
Between July and September, overseas investors sold Indian stocks worth Rs 1.02 lakh crore, while domestic investors bought shares worth Rs 2.21 lakh crore.
“Foreign investors have been sellers for most of the year, preferring the US and emerging markets such as China, Taiwan and Korea,” said Sriram Velayudhan, senior vice president at IIFL Capital Services Ltd, as per ET.
Foreign holdings have been declining steadily since December 2020, dropping from 21.21% to 16.71% now, with the pace of reduction accelerating since mid-2023.
Despite foreign selling, the Indian market has remained resilient. “Earlier, a pullback from global investors would result in a market crash,” said Pranav Haldea, managing director at Prime Database Group, as quoted by ET.
“That is not the case anymore, as domestic inflows provide support”, Haldea added.
According to Bhamre, mutual funds are required to invest regardless of market valuations, while overseas investors have the flexibility to allocate funds across global markets.
However, foreign funds have shown interest in Indian IPOs. In October alone, they invested $1.2 billion (Rs 10,708 crore) in primary market offerings , the second-highest amount this year after $1.7 billion (Rs 14,247 crore) in July.
“While global investors are selling in secondary markets, they have participated in the primary market issuances, which is a good sign,” said Velayudhan.
Still, Bhamre noted that FPIs remain cautious overall, finding Indian valuations expensive. “When markets correct or consolidate, FIIs are expected to lend support as retail money could move out in such a scenario,” he added.
As per ET, domestic institutional investors (DIIs) now hold 18.26% of all NSE-listed companies, an increase of 44 basis points in the September quarter — their highest level on record since 2009.
Meanwhile, foreign ownership fell 34 basis points to 16.71%, its lowest in 13 years.
According to ET, DII holdings first overtook foreign portfolio investors (FPIs) in the March quarter and the gap has widened since then. Local institutions, supported by steady inflows from retail investors , continue to invest aggressively, while foreign fund managers have scaled back amid global uncertainties and stretched valuations.
“The widening gap between FII and DII holdings indicates the ‘retailisation’ of corporate India,” said Siddarth Bhamre, head of research at Asit C Mehta Intermediates, as quoted by ET.
He noted that retail investors drive most mutual fund flows, while institutional participation largely comes through trusts and family offices.
Driven by record monthly inflows through systematic investment plans (SIPs), mutual funds ’ share in listed companies rose to an all-time high of 10.9%, up from 10.56% in the June quarter.
Between July and September, overseas investors sold Indian stocks worth Rs 1.02 lakh crore, while domestic investors bought shares worth Rs 2.21 lakh crore.
“Foreign investors have been sellers for most of the year, preferring the US and emerging markets such as China, Taiwan and Korea,” said Sriram Velayudhan, senior vice president at IIFL Capital Services Ltd, as per ET.
Foreign holdings have been declining steadily since December 2020, dropping from 21.21% to 16.71% now, with the pace of reduction accelerating since mid-2023.
Despite foreign selling, the Indian market has remained resilient. “Earlier, a pullback from global investors would result in a market crash,” said Pranav Haldea, managing director at Prime Database Group, as quoted by ET.
“That is not the case anymore, as domestic inflows provide support”, Haldea added.
According to Bhamre, mutual funds are required to invest regardless of market valuations, while overseas investors have the flexibility to allocate funds across global markets.
However, foreign funds have shown interest in Indian IPOs. In October alone, they invested $1.2 billion (Rs 10,708 crore) in primary market offerings , the second-highest amount this year after $1.7 billion (Rs 14,247 crore) in July.
“While global investors are selling in secondary markets, they have participated in the primary market issuances, which is a good sign,” said Velayudhan.
Still, Bhamre noted that FPIs remain cautious overall, finding Indian valuations expensive. “When markets correct or consolidate, FIIs are expected to lend support as retail money could move out in such a scenario,” he added.
You may also like
Farah Khan reveals Kajol returned to film set just a month after giving birth
India, US discuss bilateral trade engagement, opportunities of collaboration in technology
Bihar: Locals in Danapur use boats to reach polling stations to cast their vote
'I found two rare Jellycats at charity shop and couldn't believe their true worth'
Gold gains from 1-week low as dollar declines amid peak wedding season demand
