DIIs overtake FIIs in Nifty50 ownership for the first time

While DIIs had earlier surpassed FIIs in overall equity ownership, they had continued to trail foreign investors within the Nifty50 index until now.

• DIIs now hold more Nifty50 than FIIs for the first time, marking a shift
• DII ownership in Nifty50 rose to 24.8 percent, surpassing FIIs at 24.3 percent
• SIP inflows and pension funds boosted DII dominance in Indian equities.

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Domestic institutional investors have overtaken foreign institutional investors in ownership of India’s benchmark Nifty50 index for the first time, signalling a structural shift in market participation amid persistent foreign selling driven by global trade uncertainties and heightened volatility.

As of the December 2025 quarter, DIIs held about 24.8 percent of the Nifty50, marginally higher than FIIs, whose ownership declined to around 24.3 percent, an eight-quarter low, according to data from Motilal Oswal Securities. While DIIs had earlier surpassed FIIs in overall equity ownership, they had continued to trail foreign investors within the Nifty50 index until now.

Naveen Vyas, Senior Vice President at Anand Rathi Global Finance, said the development represents a structural shift rather than a cyclical trend. He said the transition has been supported by strong incremental SIP inflows of Rs3.34 lakh crore in calendar year 2025, increased participation from pension funds in equities, and the launch of new asset management companies in India, all of which are strengthening the domestic institutional ecosystem.

In contrast, FIIs have been gradually reducing their exposure to Indian equities due to a weakening rupee and relatively more attractive return opportunities in other global markets. Over the past five years, the growing influence of DIIs has played a crucial role in supporting the market, enabling the Nifty to deliver absolute returns of around 72 to 75 percent despite cumulative FII selling of nearly Rs 9.96 lakh crore.

FII holdings in the Nifty50 declined by 90 basis points year-on-year and 20 basis points quarter-on-quarter, while DII ownership rose to an all-time high, increasing by 170 basis points year-on-year and 30 basis points sequentially. The divergence in positioning was broad-based, with FIIs reducing their holdings in nearly 78 percent of Nifty50 constituents during the quarter, while DIIs increased their stakes in about 82 percent of the index companies.

In value terms, assets under custody for DIIs stood at around $24.8 billion, edging past FII holdings of approximately $24.3 billion.

Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital, said DII dominance is largely sustainable, though not unconditional. He said that even during a market correction, domestic flows are likely to moderate rather than reverse, given the long-term nature of SIPs, EPFO, and insurance allocations.

At the stock level, DII ownership rose the most on a year-on-year basis, by more than four percentage points, in Eternal, Dr. Reddy's Laboratories, Asian Paints, Tech Mahindra, InterGlobe Aviation, Trent, Max Healthcare Institute, Shriram Finance, Axis Bank, Bajaj Auto, and Tata Consumer Products.

In contrast, FIIs increased their year-on-year holdings in select companies, including Bharti Airtel, Eicher Motors, Grasim Industries, Bharat Electronics, Bajaj Finserv, Bajaj Finance, Hindalco Industries, Maruti Suzuki India, Wipro, and InterGlobe Aviation.

Gaurav Bhandari, CEO of Monarch Networth Capital, said that while global risk aversion has temporarily reduced FII participation, the fact that DIIs are now dominant even in the most liquid and widely tracked index reflects a deepening of India’s domestic capital base rather than a short-term anomaly.