Domestic Investors Reach Record High Ownership in Indian Equities; Foreign Investors Hit 13-Year Low

Domestic institutional investors (DIIs) have set a new record by increasing their ownership stake in National Stock Exchange (NSE)-listed companies to 18.26 percent as of September 2025. This milestone follows a trend where DIIs first overtook foreign portfolio investors (FPIs) in terms of ownership share during the March 2025 quarter.

In stark contrast, FPIs' share in Indian equities has fallen to its lowest point in 13 years, standing at 16.71 percent. This decline is attributed to substantial outflows amounting to Rs 76,619 crore during the July to September 2025 quarter, indicating a reduced appetite for Indian stocks among foreign investors.

The primary driver behind the surge in DII ownership appears to be mutual funds. Their collective ownership has grown for nine consecutive quarters, reaching an all-time high of 10.93 percent, underscoring robust domestic savings and investment flow into the market.

Impact This shift in ownership dynamics suggests growing confidence among domestic investors in the Indian market. A sustained increase in DII holdings can lead to greater market stability, as domestic institutions often have a longer-term investment horizon compared to some foreign investors. It may also imply less volatility driven by sudden foreign capital movements. Rating: 7/10.

Difficult Terms: Domestic Institutional Investors (DIIs): These are financial institutions based in India that invest in the country's stock markets. Examples include mutual funds, insurance companies, and pension funds. Foreign Portfolio Investors (FPIs): These are investors from outside India who invest in Indian financial assets, such as stocks and bonds. They are generally considered more volatile than DIIs. Ownership: The percentage of total shares of a company held by a particular group of investors. Outflows: The amount of money that leaves an investment fund or market, typically indicating selling pressure.