DIIs Overtake FIIs in Nifty50 Ownership for First Time, Marking Historic Shift

The data from Motilal Oswal Securities showed that as of the December 2025 quarter, domestic institutions held about 24.8 per cent of the Nifty50, marginally higher than foreign investors at around 24.3 per cent.

Analysts said the FII ownership marked an eight‑quarter low for foreign ownership, and a deepening domestic capital base, adding that the shift is structural rather than cyclical.

While domestic investors had earlier surpassed foreigners in overall equity ownership, they had continued to trail within the Nifty50 until the latest quarter.

Market watchers pointed out strong incremental systematic investment plan inflows of Rs 3.34 lakh crore in 2025, growing pension fund participation and the entry of new asset management companies driving this surge.

Further, domestic institutional investments such as Employees' Provident Fund Organisation (EPFO) allocations and insurance investments also supported this shift and are likely to moderate rather than reverse in a correction.

Over the past five years, domestic flows have helped the market deliver robust returns even as foreign investors sold nearly Rs 9.96 lakh crore cumulatively, they noted.

The brokerage data showed foreign institutional investor holdings in the Nifty50 fell by 90 basis points year‑on‑year and 20 basis points quarter‑on‑quarter, while domestic institutional ownership rose by 170 basis points YoY and 30 basis points, sequentially.

Foreign investors cut stakes in about 78 per cent of Nifty50 constituents during the quarter, while domestic institutions increased holdings in roughly 82 per cent of index constituents.

In value terms, assets under custody for domestic institutions stood at about $24.8 billion, edging past foreign holdings of around $24.3 billion.

A significant feature of the market behaviour in 2025 was that India's tepid performance last year (Nifty return of 10 per cent) was despite the massive DII investment of Rs 7.44 lakh crore, which completely eclipsed the total FII selling of Rs 166,283 crore.

A key reason was the poor earnings growth and the consequent elevated valuations, a recent report has said, adding that positive triggers such as an India-US traded deal can reverse the sentiments causing FIIs to return.

- IANS