Historic first—Domestic investors surpass foreign peers in Indian stock ownership
What's the story
In a major development in the Indian equity market, domestic institutional investors (DIIs) have surpassed foreign institutional investors (FIIs) in terms of shareholdings for the first time.
As of the March 2025 quarter, DIIs held approximately 16.91% of Indian equities, marginally ahead of FIIs, whose share stood at around 16.84%.
The change is attributed to continued selling by FIIs amid global trade uncertainties and market volatility.
Asset comparison
DII assets under custody surpass FIIs
Consequently, the assets under custody for DIIs now amount to about ₹69.8 lakh crore, and those for FIIs are about ₹69.58 lakh crore.
The shift comes after a massive wave of domestic buying that started in late September 2024.
During this time, DIIs pumped in over ₹3.97 lakh crore, while FIIs dumped over ₹2.06 lakh crore, respectively—data from NSE and NSDL showed.
Market stability
DII-driven capital could stabilize market volatility
Siddharth Bhamre, Head of Research at Asit C. Mehta Investment Intermediates, stressed the structural nature of this shift.
He pointed out that FIIs have been consistent net sellers over the past year, while domestic flows, largely driven by retail investors through mutual fund SIPs, have remained resilient.
Bhamre believes this change could potentially reduce market volatility as DII-driven capital is more stable than FII flows.
Participation trend
Rising domestic participation in Indian equity market
Notably, the trend of rising domestic participation isn't new. Since 2021, DIIs have outperformed FIIs in terms of net investments.
In 2021, DIIs invested over ₹98,000 crore while FIIs added just over ₹26,000 crore.
The next year, DIIs poured in over ₹2.76 lakh crore while FIIs pulled out over ₹1.28 lakh crore according to ACE Equities data.
Investor behavior
FII participation inconsistent; retail investor participation consistent
Dhananjay Sinha, Co-Head of Equity & Research at Systematix Group, observed that FII participation has been sporadic in recent years, with multiple phases of heavy outflows.
Retail investor participation through SIPs and other avenues, on the other hand, has witnessed consistent growth.
Though FIIs continue to be key market players, their recent selling during bouts of global uncertainty has coincided with market corrections, furthering the stabilizing role of domestic investors.