The National Stock Exchange’s latest Market Pulse report from April offers an interesting comparative study, benchmarking global markets and revealing the key structural shifts in Indian markets that are driving greater maturity and resilience.
According to the report, over the past three decades, global markets have undergone a marked shift in sectoral composition. For instance, the US markets have seen a pronounced rise in technology dominance, while China has moved away from a real estate-led structure towards a more balanced mix of technology and financials. On the other hand, Japan’s market structure has remained relatively stable, with gradual diversification.
Financials dominate
“India’s transition has been distinct: from a commodity-led market to one dominated by financials, alongside a declining share of materials and energy. These shifts are reflected in rising concentration metrics for the US markets, while India has moved in the opposite direction, with declining concentration indicating greater dispersion across firms and sectors,” according to the study.
In 1995, materials dominated with a 25 per cent share of total market capitalisation, followed by energy at 18 per cent and consumer discretionary at 13 per cent. By 2025, the financial sector emerged as the leading sector, accounting for 25 per cent of overall market capitalisation. Industrial and consumer discretionary follow with shares of 13 per cent and 12 per cent, respectively. Notably, the share of Information Technology has increased significantly to 8 per cent in 2025, compared to 1 per cent in 1995, the report further said. However, IT sector hit a high of 16 per cent in 2000.
Ownership changes
While the latest NSE pulse captured the sectoral dominance in market cap, another study by Primedatabase revealed how foreign portfolio investors’ years of dominance have been declining in Indian markets. Their holding which rose to as high as 25.72 per cent in March 2023, has declined sharply to a 13-year low of 16.60 per cent as on December 31, 2025. The share of MFs touched an all-time high of 11.10 per cent. Also, the share of domestic institutional investors (including DMFs) hit record high of 18.72 per cent.
According to NSE study, Communication Services and Energy saw FPI holding increasing while most sectors saw either stable or declining foreign share in the respective sector’s market capitalisation. Communication Services saw FPI share hitting a 25-quarter high of 23.7 per cent, while Energy sector recorded a five-quarter high of 16.7 per cent. Consumer Discretionary and Financials witnessed the sharpest declines, with FPI share falling to 15.9 per cent (a 14-quarter low) and 23.4 per cent (near a 21-year low), respectively.
Despite this moderation, FPIs continued to remain the largest non-promoter shareholders in financials. Consumer Staples, Healthcare, and Utilities also recorded modest declines, while ownership in other sectors remained broadly unchanged.
These are significant structural changes in Indian stock markets. Unlike earlier when a handful of sectors or stocks move the market and make noise, this diversification signals maturing of Indian markets. The equal dominance of FPIs and DIIs will also help mitigate volatility.
However, one has to wait and see whether this trend continues or some sectors such as capital markets, agro, food processing, supply chain, healthcare and pharma will take the crown. But, at present, one thing is certain: dominance of a single sector may not happen anytime soon.
Published on April 24, 2026