DIIs Strengthen Hold Over Indian Equities, Ownership Climbs to 20.6%

Mumbai – Domestic Institutional Investors (DIIs) have reinforced their position in Indian equity markets, with their ownership rising to 20.6 per cent, according to a report released on Monday.

The report by Motilal Oswal Financial Services Ltd revealed that DIIs remained strong buyers, investing $23.4 billion in the fourth quarter of 2025 and $90.1 billion throughout the year. The surge was largely supported by consistent Systematic Investment Plan (SIP) inflows into domestic mutual funds.

The robust domestic participation helped offset significant Foreign Institutional Investor (FII) outflows, which stood at $18.8 billion in 2025. DIIs also absorbed the growing activity in the primary market, where Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs) collectively raised Rs 1.95 trillion during the year.

The report noted that the shift in institutional ownership, which began gaining traction in 2021, continues to strengthen. DII holdings in Nifty 500 companies reached a record high of 20.6 per cent, while FII ownership remained relatively stable at 18.4 per cent. Analysts indicated that any reversal in FII outflows could serve as a significant trigger for market movements.

Over the past year, DII ownership increased by 210 basis points year-on-year and 60 basis points quarter-on-quarter, reaching an all-time high in December 2025. In contrast, FII holdings declined by 50 basis points year-on-year, although they registered a slight increase of 10 basis points sequentially. FII ownership stood at 18.4 per cent compared to 18.9 per cent in December 2024.

Promoter holdings, which have traditionally remained within a stable range, dropped to a historic low of 48.8 per cent in December 2025. The decline, down 90 basis points year-on-year and 50 basis points quarter-on-quarter, was attributed to the revival of the primary market over the past three quarters. Strong investor demand and high valuations encouraged several promoters to reduce their stakes.

Sector-wise, DIIs increased their holdings in 22 of the 24 sectors on a year-on-year basis. The highest growth was observed in Electronics Manufacturing Services (EMS), Technology, Telecom, Retail, Public Sector Banks, and Healthcare sectors, while Media and Logistics witnessed a decline in DII participation.

On a sequential basis, DIIs recorded the highest rise in exposure in NBFC Non-Lending, Private Banking, Capital Goods, NBFC Lending, and Consumer sectors.

Meanwhile, FIIs increased their stakes on both quarterly and annual bases in sectors such as Public Sector Banks, Telecom, Oil and Gas, Chemicals, NBFC Lending, Insurance, and Metals, the report added.

With inputs from IANS