DIIs edge closer to overtaking FIIs in Indian market!

DII holdings in NSE-listed companies rose to 15.96 per cent in December 2023, up from 13.77 per cent in December 2018

In December 2023, there was a notable surge in domestic institutional holdings in Indian companies, rising to 18.19 per cent, up from 13.7 per cent in December 2018. Conversely, foreign holdings decreased to 18.1 per cent from 19.6 per cent over the same period. This suggests a narrowing gap between domestic and foreign institutional investors, with the former potentially surpassing the latter in ownership of NSE-listed companies.

DIIs reached an all-time high ownership of NSE-listed companies at 8.81 per cent in December 2023, driven by robust net inflows of Rs 58,198 crore during the quarter. Comparatively, FIIs invested Rs 21.76 lakh crore, slightly lower than DIIs' Rs 21.85 lakh crore in 2023.

Market experts attribute this trend to record flows into mutual funds' equity schemes and pension funds, bolstering the influence of domestic institutional investors. Investments through systematic investment plans into mutual funds also hit a record high of Rs 7,17,610 crore in December, reflecting a growing preference for domestic investment avenues.

DII and FII Holdings in Cash market

The shift in investment trends continued in January 2024, with FIIs recording a net outflow of Rs 35,977.87 crore and DIIs registering a net inflow of Rs 26,743.63 crore. FIIs turned net sellers in FY24 (Apr-Dec’23) with a net outflow of Rs 1,745.39 crore, compared to Rs 1.98 lakh crore in the previous year. Meanwhile, DIIs invested Rs 1.25 lakh crore in Indian equities in the current fiscal, surpassing foreign investors.

Over the past decade, DII holdings have steadily increased, while foreign ownership has declined. DII holdings in NSE-listed companies rose to 15.96 per cent in December 2023, up from 13.77 per cent in December 2018. Conversely, foreign holdings decreased from 19.66 per cent in December 2018 to 18.19 per cent in December 2023. The gap between FII and DII holding has narrowed to an all-time low, with DII holding now standing at just 12.23 per cent lower than FIIs.

This shift in ownership dynamics signifies a significant transformation in the Indian stock market, traditionally dominated by promoters and foreign investors. With domestic institutional investors gaining prominence, the market landscape is evolving, presenting new opportunities and challenges for investors and market participants alike.

Disclaimer: The article is for informational purposes only and not investment advice.

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