Indian Capital Market Reaches Milestone: DIIs Overtake FPIs in Ownership Share
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Domestic institutional investors (DIIs) have overtaken foreign portfolio investors (FPIs) in ownership of companies listed on the National Stock Exchange (NSE) for the first time in 22 years, underscoring the rising interest of Indian investors in equities, according to PrimeInfobase.
According to Pranav Haldea, Managing Director, PRIME Database Group, this is a landmark moment for the Indian capital market.
"Indian markets shall continue their steadfast march towards even more 'atmanirbharta' in the quarters and years to follow, with the day not too far when the share of MFs alone shall overtake that of FIIs. 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," said Haldea.
Reportedly, DIIs, along with retail and High Net Worth Individuals(HNI) investors, have now been playing a more influential role with their share reaching an all-time high of 27.10 per cent as of March 31, 2025. FIIs remain an important constituent, but their stranglehold on the Indian capital market has declined.
According to Haldea, this completes a structural shift that has taken place in the Indian market over the decade. As of March 31, 2015, the FII share was 20.71 per cent, the combined share of DII, retail, and HNI stood at just 18.47 per cent.
Amit Jain, co-founder of Ashika Global Family Office Services, said that after the pandemic, the Indian equity market has undergone a fundamental shift and the number of Demat accounts has surged from 3-4 crore to over 18 crore, reflecting a significant rise in retail investor participation.
"Even if only 50 per cent of these accounts are active, it translates to around 9 crore investors. At a modest monthly investment of INR 10,000 per investor, this equates to over INR 9 lakh crore in annual inflows, with an additional INR 3 lakh crore coming through SIPs, bringing total domestic inflows to approximately INR 12 lakh crore per year," said Jain.
Earlier, in October 2008, when foreign nationals sold INR 16,000 crore in equities, the market dropped by 25 per cent. "But now, even when they sold ₹87,000 crore in a single month this January, the Nifty barely moved, dropping only 2–3 per cent, showing how resilient we are, and that gives us confidence," added Jain.
Reportedly, some of the recent FII buying appears to be driven by short covering or hedging, and the country is more likely to see DIIs holding a larger share until foreign investors decisively return, possible only when US 10-year Gsec yields fall to 3.5 per cent levels.
According to the PrimeInfobase report, the share of retail and HNI investors decreased to 7.51 per cent and 1.98 per cent, respectively, as on March 31, 2025, from 7.70 per cent and 2.09 per cent as on December 31, 2024. As such, the combined retail and HNI share decreased to 9.49 per cent from 9.79 per cent during the quarter.
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