For the first time, DIIs hold larger share than FIIs in Indian markets

Markets

In a landmark shift, domestic institutional investors (DIIs) have surpassed foreign institutional investors (FIIs) in terms of holdings in Indian equity markets for the first time. This change comes amid persistent selling by FIIs, driven by global trade uncertainties and market volatility.

As of the March 2025 quarter, DIIs held around 16.91 percent of Indian equities, slightly overtaking FIIs whose holdings dropped to around 16.84 percent—a 50-quarter low—according to data from ACE Equities.  With this, the assets under custody of DIIs stand at around Rs 69.80 lakh crore, while those of FIIs are around Rs 69.58 lakh crore.

This crossover follows a strong wave of domestic buying that began at the end of September 2024. During this period, DIIs invested over Rs 3.97 lakh crore, while FIIs offloaded more than Rs 2.06 lakh crore, based on figures from the NSE and NSDL, respectively.

Siddharth Bhamre, Head of Research at Asit C. Mehta Investment Intermediates, highlighted the structural nature of this shift. He noted that FIIs have been consistent net sellers over the past year, whereas domestic flows—largely driven by retail investors via mutual fund SIPs—have remained resilient. While he doesn’t foresee immediate major implications from this change, Bhamre believes it could reduce market volatility, as DII-driven capital tends to be more stable compared to the more transient nature of FII flows.

This trend of rising domestic participation is not new. Since 2021, DIIs have consistently outpaced FIIs in terms of net investments. In 2021, DIIs invested over Rs 98,000 crore, while FIIs added just over Rs 26,000 crore. In 2022, DIIs poured in over Rs 2.76 lakh crore, while FIIs pulled out over Rs 1.28 lakh crore.

In 2023, both investor groups were nearly at par, with DIIs investing Rs 1.81 lakh crore and FIIs Rs 1.74 lakh crore. In 2024, DIIs were again dominant, investing Rs 5.23 lakh crore against FII net sales of Rs 8,000 crore. So far in 2025, DIIs have invested over Rs 2.1 lakh crore, while FIIs have withdrawn over Rs 1.07 lakh crore.

Commenting on the broader trend, Dhananjay Sinha, Co-Head of Equity & Research, Systematix Group, pointed out that FII participation has been inconsistent in recent years, with several phases of major outflows. In contrast, retail investor participation through SIPs and other channels has shown consistent growth. While FIIs remain important market players, their recent selling during bouts of global uncertainty has coincided with market corrections, reinforcing the stabilising role of domestic investors.