In a historic milestone for Indian capital markets, Domestic Institutional Investors (DIIs) have overtaken Foreign Portfolio Investors (FPIs) in terms of ownership in companies listed on the National Stock Exchange (NSE) for the first time in over two decades. This notable shift reflects growing domestic confidence in Indian equities, driven by sustained inflows from mutual funds, pension schemes, and retail investments.
According to a recent report released by Primeinfobase.com, DIIs held 17.62 per cent of NSE-listed companies as of the March 2025 quarter, up by 0.73 percentage points from the previous quarter. In contrast, FPI holdings dipped marginally by 0.02 percentage points to 17.22 per cent.
Rise of Domestic Participation in Indian Equities
This development underscores a structural transformation in the Indian investment landscape. Indian investors, including mutual funds, insurance firms, and pension funds, have ramped up their equity exposure in recent years, thanks to consistent returns and growing financial literacy.
“More individuals are now opting for mutual funds, the National Pension System, insurance, and direct equities, moving away from traditional assets like fixed deposits and real estate,” noted A. Balasubramanian, CEO of Aditya Birla Sun Life Mutual Fund.
Over the past five years, the surge in Systematic Investment Plans (SIPs) and digital investment platforms has made market participation more accessible. SIPs alone have played a pivotal role, offering disciplined investing and long-term wealth creation, especially among millennials and first-time investors.
A Historic Moment for Indian Markets
Pranav Haldea, Managing Director of Prime Database Group, called this development “a historic moment,” pointing to the relentless momentum of SIP inflows as a key driver. Ten years ago, FPIs held over 20.7 per cent stake in NSE firms, exceeding the combined share of DIIs, retail, and HNIs at the time. The tables have now turned.
Experts believe this reversal is not just symbolic but structural, signaling a maturing capital market ecosystem led by domestic trust and participation.
Stock Market Rally Bolsters Sentiment
Further lifting investor sentiment, the Indian stock market posted strong gains in April despite global economic uncertainties. The BSE Sensex rose by 3.65 per cent, while the NSE Nifty gained 3.46 per cent, fueled by optimism in banking and financial stocks.
Banking stocks led the rally, with the Nifty Bank index surging 6.83 per cent during the month. Other sectors like auto, PSU banks, FMCG, real estate, and financial services also delivered returns of over 4 per cent.
Conclusion: A Shift That’s Here to Stay
The rising stake of DIIs in the Indian equity market reflects more than a numerical change, it marks the growing financial empowerment of domestic investors. As India continues its journey toward becoming a $5 trillion economy, the increasing dominance of local investors is likely to create a more stable and resilient stock market.
