Over the past year, DIIs have increased their shareholding in a majority of index constituents, while FIIs have pared their exposure. Photo Credit: Baris-Ozer
The share of domestic institutional investors (DIIs) in the ownership of Nifty-50 companies has exceeded that of foreign institutional investors (FIIs) for the first time in the December quarter, while continuing the dominance in the Nifty 500 companies for the seventh consecutive quarter.
DIIs held a 24.8 per cent share in Nifty-50 ownership, compared with 24.3 per cent held by FIIs as of December 2025, according to an ownership analysis by Motilal Oswal Financial Services. Over the past year, DIIs have increased their shareholding in a majority of index constituents, while FIIs have pared exposure amid global macro uncertainty.
Meanwhile, DIIs have consolidated their position as the dominant force in Indian equities, with their holdings in Nifty-500 companies rising to an all-time high of 20.6 per cent in December 2025, widening their lead over FIIs, whose stake stood at 18.4 per cent.
The gap between FII and DII ownership has narrowed to just 90 basis points, a significant shift from December 2015 when FIIs held 21.5 per cent compared to DIIs’ 12.1 per cent. DIIs pumped in $23.4 billion during the December quarter and $90.1 billion through calendar year 2025, primarily driven by steady systematic investment plan inflows into domestic mutual funds.
“DIIs holding a larger share than FIIs in the Nifty50 underscores a fundamental shift toward stronger domestic participation in India’s equity markets,” said Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India. “The increasing dominance of domestic money provides a more stable, long-term source of liquidity, reduces reliance on volatile foreign flows, and could help cushion markets during global risk-off phases.”
MFs close gap with FIIs
Mutual funds, in particular, have been closing the gap with foreign investors at a faster pace. According to data from primeinfobase.com, the difference between FII and mutual fund shareholding in NSE-listed companies narrowed to 5.50 per cent as of December 31, 2025, from 10.51 per cent three years ago. Mutual funds held 11.10 per cent of listed companies at the end of December, up from 10.94 per cent in September, marking the tenth consecutive quarter of increase.
FII holdings, meanwhile, declined to a 13-year low of 16.60 per cent, as foreign investors pulled out ₹11,765 crore during the quarter, even as they invested ₹30,325 crore in primary markets. On a year-on-year basis, FIIs reduced their stakes across 15 of the 24 sectors within the Nifty-500, with the largest cuts in electronics manufacturing services, consumer durables, technology, infrastructure and retail.
“For years, FIIs have been the largest non-promoter shareholder category in the Indian market. This is no longer the case,” said Pranav Haldea, Managing Director of PRIME Database Group. He said DIIs, along with retail investors and high net worth individuals, have played a strong countervailing role, with their combined share reaching an all-time high of 28 per cent as of December 31, 2025.
Promoter holdings declined to an all-time low of 48.8 per cent, down 90 basis points year-over-year, as buoyant primary and secondary markets provided opportunities for stake dilution. Retail investor holdings also moderated to 12.1 per cent, down 60 basis points from the previous year.
“…this milestone reflects the coming of age of the retail investor, whose patient, long-term capital is increasingly strengthening domestic markets. The fact that monthly SIP flows have continued to rise even through a phase of relatively muted returns underscores both growing maturity and the ongoing financialisation of household savings. This trend appears structural and should anchor the Indian markets domestically,” said Varun Gupta, CEO of Groww Mutual Fund.
Sectoral allocation patterns showed both DIIs and FIIs increasing their exposure to financial services, which now accounts for 28.34 per cent of DII holdings and 31.85 per cent of FII holdings. DIIs raised stakes in 22 out of 24 sectors on a year-over-year basis, with the maximum increases in electronics manufacturing services, technology, telecom, retail, PSU banks, and healthcare sectors.
Published on February 9, 2026