DIIs have overtaken foreign peers in a significant shift in Indian equity market ownership, with their holdings in Nifty 500 companies touching a record 20.9 per cent in March 2026.
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MUMBAI — Domestic institutional investors (DIIs) have overtaken foreign peers in a significant shift in Indian equity market ownership, with their holdings in Nifty 500 companies touching a record 20.9 per cent in March 2026, a report has said.
As per Motilal Oswal Financial Services Limited (MOFSL) report, this marks the eighth consecutive quarter of rise in DII holdings, up 170 basis points year-on-year and 50 basis points quarter-on-quarter.
In contrast, foreign institutional investor holdings slipped to a fresh low of 17.1 per cent, down 180 basis points over the same period, it said.
The FII-DII ownership ratio in the Nifty 500 has now contracted to 0.8 times, a level that signals a decisive structural shift in who controls India's equity markets.
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According to MOFSL, the primary driver behind DII strength has been the steady inflow through systematic investment plans.
In the first quarter of calendar year 2026, domestic institutions pumped $27.2 billion into Indian equities, even as foreign investors pulled out $ 15.8 billion, the bulk of it, $14.2 billion, in March alone, that triggered by the escalating Iran conflict.
"Once the war dust settles, there is a high likelihood of a better FII flow environment," the report noted.
It further said that even a slowdown in outflows would be viewed positively by the market.
Among sectors, DIIs raised their stakes in 21 of 24 sectors on a year-on-year basis, with the sharpest increases in private banks, technology, telecom, real estate, and Healthcare. FIIs, by contrast, cut holdings in 17 sectors, and their allocation to the technology sector fell to an all-time low of 7.3 per cent.
In addition, promoter holdings edged up 40 basis points quarter-on-quarter to 49.4 per cent, while retail holdings rose modestly to 12.7 per cent.
Across market capitalisation segments, DIIs raised their stakes in large-cap, mid-cap, and small-cap stocks alike -- all touching record highs -- while FIIs reduced exposure across the board.
In terms of returns, the Nifty 500 has gained about 80 per cent in the last five years and 2.76 per cent over the past year. Since the start of the US-Iran war (February 28), the index has declined 0.02 per cent or 5 points, from 22,835.95 (March 2) to 22,830.75 (May 3).