Domestic investors surpass foreign investors in Nifty50 ownership
What's the story
In a historic first, domestic institutional investors (DIIs) have overtaken foreign institutional investors (FIIs) in the ownership of India's benchmark Nifty50 index. This change comes amid continued foreign selling due to global trade uncertainties and market volatility. As per Motilal Oswal Securities data, DIIs held about 24.8% of Nifty50 in Q4 2025, slightly ahead of FIIs who held around 24.3%.
Market dynamics
SIP inflows and pension fund participation driving DII dominance
Naveen Vyas, Senior VP at Anand Rathi Global Finance, said this shift is a structural change and not a cyclical one. He attributed it to strong incremental SIP inflows of ₹3.34 lakh crore in calendar year 2025, increased pension fund participation in equities, and the emergence of new asset management companies in India. These factors are all strengthening the domestic institutional ecosystem.
Investment trends
FIIs's gradual exit from Indian equities
FIIs have been gradually reducing their exposure to Indian equities due to a weakening rupee and better return opportunities in other global markets. Over the last five years, DIIs have emerged as a key market support player, helping Nifty deliver absolute returns of around 72-75% despite cumulative FII selling of nearly ₹9.96 lakh crore.
Ownership surge
DII holdings at all-time high
FII holdings in Nifty50 fell by 90 basis points YoY and 20 basis points QoQ, while DII ownership hit an all-time high, rising by 170 basis points YoY and 30 basis points sequentially. The divergence was broad-based with FIIs cutting their stakes in nearly 78% of Nifty50 constituents during the quarter while DIIs raised theirs in about 82% of index companies.
Asset comparison
DII dominance likely to continue
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 that while DII dominance is largely sustainable, it isn't unconditional. He added that even during a market correction, domestic flows are likely to moderate rather than reverse due to the long-term nature of SIPs and other allocations.