Domestic institutional investors (DIIs) are close to restoring the balance in the capital market’s power structure.
DIIs have matched the share of foreign institutional investors (FIIs) as of December, data compiled by Prime Database Group shows.
DIIs have invested nearly ₹1.86 lakh crore during the quarter ended December 2024, taking their share of the Indian capital market to an all-time high of 16.90 per cent as of December 31, 2024, up from 16.46 per cent as of September 30, 2024, according to primeinfobase.com.
This was primarily due to the domestic mutual funds investing ₹1.54 lakh crore during the quarter, taking their share in companies listed on the NSE to a high of 9.93 per cent as of December 31, 2024 (up from 9.46 per cent as of September 30).
Meanwhile, with a net outflow of ₹1,00,182 crore, the share of FIIs decreased to a 12-year low of 17.23 per cent from 17.55 per cent during the quarter.
The FII to DII ownership ratio — the value of shares owned by FIIs over the value of shares owned by DIIs — also decreased to an all-time low of 1.02 as on December 31, 2024, from a high of 1.99 as of March 31, 2015 (see chart).
The trend continued in January with further sales of ₹78,207 crore by FIIs and investment of ₹86,592 crore by DIIs in January, DII share is likely to have overtaken FII share, market analysts said.
“For years, FIIs have been the largest non-promoter shareholder category in the Indian market with their investment decisions having a huge bearing on the overall direction of the market.
“This is no longer the case. DIIs along with retail (individuals with up to ₹2 lakh shareholding in a company) and high net worth individual (HNI) (more than ₹2 lakh) investors have now been playing a strong countervailing role,” said Pranav Haldea, MD, Prime Database Group.
While DIIs have increased their share in aggregate, the country’s largest institutional investor has seen a decrease.
LIC’s share, across 284 companies where its holding is more than 1 per cent, was 3.51 per cent as of December 31, 2024, against 3.59 per cent as of September 30, 2024.
This was primarily on account of profit booking, with LIC increasing its stake in 71 companies during the quarter while reducing its stake in 98 companies.
Sectoral movements further show that DIIs have increased their allocation mostly to financial services from 25.06 per cent of their total holding as of September 30, 2024, to 25.86 per cent of their total holding as of December 31, 2024. They decreased their allocation mostly to energy (10.11 per cent to 8.88 per cent).
FIIs, meanwhile, have increased their allocation mostly to information technology (8.68 per cent to 9.85 per cent), while they decreased their allocation to energy (7.65 per cent to 6.30 per cent).