Indian Stock Market: A Look At Ownership Structure

Ownership in the Indian stock market is shifting. Foreign investors, once the dominant force, are reducing their stakes, while domestic institutional investors (DIIs) and retail investors are increasing their share. The latest data from December 2024 gives a clearer picture of these changes.

Foreign Investors Stake

Foreign Portfolio Investors (FPIs) pulled out $12 billion from Indian equities in Q4 2024, bringing their stake in the top 500 NSE-listed companies down to 18.8%, the lowest in 12 years.

However, they are not entirely exiting. While their holdings in Nifty 50 declined, their investments in midcaps and small caps grew.

Midcap holdings increased by 45 basis points (bps) YoY, while small-cap allocations rose by 60 bps.

DIIs Increase Their Share in the Market

As FPIs cut their exposure, DIIs expanded theirs, reaching a record 17.9% stake in the top 500 companies. Mutual funds, a key part of DIIs, saw their ownership cross 10.7% for the first time.

The Nifty 50 saw a 200-bps increase YoY, midcaps gained 100 bps, and small caps rose 70 bps.

Retail Investors Stick to Small Caps

Retail investors maintained a steady 8.8% stake in the market. However, their small-cap exposure increased by 20 bps to 9.4%, while their holdings in Nifty 50 (6.9%) and midcaps (9.7%) remained stable in the December Quarter.

FPI Sell-Off Continues in 2025

January 2025 saw further FPI selling, with ₹78,000 crore worth of equities offloaded. By February 10, 2025, an additional ₹7,342 crore had been sold.

Since October 2024, total FPI outflows have reached ₹1.7 lakh crore, with January seeing selling pressure on 22 out of 23 trading days.

Sectors Affected by FII Buying & Selling

Some sectors saw heavy selling by FIIs in January 2025:

• BFSI: $2.8 billion outflow
• IT: $747 million outflow
• Oil & Gas: $182 million outflow
• Automobiles: $672 million outflow

On the other hand, some sectors saw minor inflows:

• Chemicals: $41 million inflow
• Media: $20 million inflow
• Telecom: $16 million inflow

FII Ownership Hits a Decade Low

FII shareholding in Indian equities has been falling for a decade, from 20.2% in January 2015 to 16.0% in January 2025. Their Equity Assets Under Custody (AUC) also dropped to ₹67.7 lakh crore in January 2025, down 5% from ₹71.1 lakh Crore in December 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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