Foreign institutional investors (FIIs) pumped ₹72,800 crore into Indian IPOs over the past year, while pulling ₹4.53 lakh crore from secondary markets. Domestic institutional investors (DIIs) have stepped in to provide stability, now holding a larger share of Indian equities than foreign investors.
Foreign institutional investors have significantly changed their approach to the Indian stock market over the past year. While they have been aggressive sellers in the secondary market, withdrawing ₹4.53 lakh crore, they have simultaneously shown strong appetite for new listings. Recent data shows that these investors channeled ₹72,800 crore into primary market offerings, signaling a preference for initial public offerings (IPOs) even as broader market sentiment remains cautious.
IPO Market Remains a Key Attraction
Despite geopolitical uncertainties and a drop of over 6% in the Sensex over the past year, the Indian IPO landscape has stayed active. A total of 114 companies successfully raised ₹1.71 lakh crore during this period. This primary market activity reflects a clear interest in fresh growth stories, particularly in the latter half of the year, which saw 84 companies raise ₹1.48 lakh crore. Investors have been attracted to the availability of high-quality businesses across various sectors, which often provide different return profiles compared to established, large-cap companies in the secondary market.
Shifting Ownership Trends
The most significant change in the Indian equity landscape is the structural shift in market ownership. Domestic institutional investors have become the primary stabilizers of the market. In June 2026 alone, domestic investors poured ₹85,800 crore into stocks, successfully counterbalancing the foreign outflow of ₹35,170 crore. As a result of this long-term trend, the share of Indian equities held by foreign investors has fallen to 14.2% as of June 2026, down from 20% a decade ago. Conversely, domestic holdings have risen to 18.7%, marking a period since December 2024 where domestic money consistently outweighs foreign capital in total market ownership.
Sectoral Divergence in Capital Flow
Foreign selling in June was widespread, hitting major sectors like Oil & Gas, Auto, Metals, and IT, which recorded significant net outflows. However, institutional money has not left India entirely; it has merely migrated toward specific domestic-demand-driven areas. The banking and financial services sector (BFSI) remains the most important segment for foreign investors, accounting for 30.8% of their total assets under custody. In June, sectors including BFSI, Consumer Durables, Services, and Realty shifted from net selling to net buying, suggesting that foreign capital is now more selective and focused on businesses that benefit directly from local economic growth.
Investors may continue to monitor whether domestic institutional inflows remain strong enough to absorb potential further foreign selling. The key monitorable for the coming quarters will be whether companies entering the primary market can maintain their listing performance, which will be essential for keeping foreign interest in Indian IPOs alive despite the broader volatility in global equity markets.