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Promoter holdings private listed firms drops 600 bps to 37% since 2021
Promoter holdings in the top 200 privately owned listed companies have fallen by nearly 600 basis points (bps): from 43 per cent in FY21 to 37 per cent by the end of FY25.
This decline is largely driven by promoter share sales through block deals, with domestic mutual funds (MFs) absorbing most of the supply. Between FY21 and FY25, MF holdings in BSE 200 companies rose by 360 bps to 10.9 per cent, while foreign portfolio investor (FPI) holdings dropped by 420 bps to 24.4 per cent.
According to Kotak Institutional Equities (KIE), this shift reflects promoters capitalising on high valuations, with MFs stepping in as 'price-agnostic' buyers.
'Retail households, through institutional investors, have bought at the expense of FPIs and insiders,' said KIE in a note, highlighting sustained inflows into domestic institutional investors (DIIs) despite FPI outflows.
During the first half of calendar year 2025, DIIs pumped in Rs 3.5 trillion into listed stocks, up from Rs 2.4 trillion during the same period last year. FPIs were net sellers of more than Rs 82,000 crore during the first half.
The flows have bolstered the Indian market's ability to absorb large stake sales. Earlier this year, British American Tobacco (BAT) and Singtel sold shares worth nearly Rs 13,000 crore each in ITC and Bharti Airtel, respectively.
Lower promoter holdings have increased the free-float market capitalisation (mcap) of Indian equities, boosting India's weight in global benchmarks like the MSCI Emerging Markets (EM) index. By June 2025, India's weight in the MSCI EM index reached 18.12%, up from less than 8 per cent in 2021, trailing only China, which is at 28.4 per cent.
Historically, India's free float —shares held by non-promoters — has lagged behind global peers like the US, UK, Japan, Taiwan, South Korea, Brazil, and Singapore. Typically, in the developed world, the free float mcap is above 90 per cent. The recent decline aligns India's free float more closely with Asian peers like South Korea, Brazil, and Taiwan.
Interestingly, the overall private promoter ownership edged higher by almost 11.6 percentage points between June 2010 to December 2021. It then hit a downward slope amid a sustained rise in domestic equities.
KIE's analysis suggests promoters have timed stake sales to capitalise on high Nifty valuations, with sales peaking during periods of elevated market prices.
Currently, the Nifty 50 index trades at 22x its estimated earnings for the next 12 months, higher than the historical average of 20x.
Changing Dynamics
Promoters have sold stakes worth Rs 3.6 trillion since 2021
Promoter selling (Rs cr)
2019 24,400
2020 77,100
2021 67,000
2022 38,800
2023 100,700
2024 89,100
H12025 59,900
MFs have absorbed a significant portion of promoter stake sale
Mar-21 Mar-25 Change (%)
Promoters 43.2 37.4 -5.8
MFs 7.3 10.9 3.6
FPIs 24.4 20.2 -4.2
Retail 7.8 7.7 -0.1
Others 17.3 23.8 6.5
Markets now better equipped to handle large promoter stake sales
Top sales by Promoters (Rs cr)
Bharti Airtel 13,173
IndiGo 11,564
Vishal Mega Mart 10,200
Bajaj Finserv 5,506
Hindustan Zinc 3,018
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