Domestic investors' share in Indian equities hits record 17%, foreign investors' share at 15-year low: SEBI
New Delhi, August 9
Domestic institutional investors increased their share in Indian equities to an all-time high of 17 per cent by the end of March 2026, while the share held by foreign portfolio investors fell to a 15-year low of 15.8 per cent, according to the Securities and Exchange Board of India's Annual Report 2025-26.
The shift came during a year when foreign investors pulled money out of the Indian market amid heightened global uncertainty, while domestic institutions continued to invest.
SEBI said domestic institutional investors (DIIs), including banks, development financial institutions, insurance companies, mutual funds and the National Pension System (NPS), recorded a cumulative net investment of Rs 8.5 lakh crore during 2025-26.
"Despite this volatility, Domestic Institutional Investors (DIIs), comprising Banks, DFIs, insurance, mutual funds and NPS, acted as a critical countervailing force, absorbing foreign divestments with a record cumulative net inflow of Rs 8.5 lakh crore, heavily supported by consistent mutual fund SIPs," SEBI said in the report.
This pushed the share of domestic institutional investors in Indian equities to a record level even as foreign investor ownership declined.
The shift also reflects the growing role of domestic savings in India's capital markets. Mutual fund investments through systematic investment plans (SIPs) remained a major source of domestic money during the year.
According to the report, the number of SIP accounts increased 3.9 per cent to 10.45 crore in 2025-26 from 10.05 crore in the previous financial year. Average net monthly SIP investments increased 25.8 per cent to Rs 16,413 crore from Rs 13,052 crore.
The domestic buying helped cushion Indian markets during a volatile year. The Nifty 50 touched a record high of 26,328.6 in early January 2026 before geopolitical tensions in the Middle East led to a correction. The index ended the financial year with a decline of 5.1 per cent.
Foreign investment was affected by global factors, including geopolitical tensions in West Asia, elevated crude oil prices and rising US bond yields, which led investors to move money across global markets during the year.
Despite the market volatility, India remained the world's fifth-largest stock market, with total market capitalisation at Rs 411.6 lakh crore at the end of 2025-26, according to the SEBI report.
— ANI
Reader Comments
The rise in SIP accounts is really encouraging—10.45 crore accounts! But I hope people are also understanding the risks. Mutual funds are not a guaranteed returns scheme. We need more financial literacy so that people don't panic when markets go down like they did this year with the 5% fall.
Interesting shift in market dynamics. Foreign investors are clearly nervous about global uncertainties, but India's domestic strength is showing resilience. The increasing participation of local institutions provides stability. It's a positive development for long-term market health.
Honestly, this is what happens when FIIs run away at the first sign of trouble. But our DIIs and retail investors stayed strong—that's the real story here. The beauty of SIPs is that they force you to invest regularly, removing the emotion from investing. If only the government would also focus on making tax rules simpler for retail investors! 😅
Record 17% share by domestic players—this is a big achievement. But let's not forget that foreign investors still hold almost 16%, and they can still influence the market significantly. The real test will be whether Indian investors can maintain this confidence during prolonged global crises, not just one tough year.
As someone who has been tracking emerging markets for years, this is actually a very healthy sign for India. Domestic investors provide stability that foreign money can't. When your own citizens believe in their market, that's the strongest signal of confidence.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.