Mumbai, February 9: A new report reveals that domestic institutional investors (DIIs) have, for the first time, surpassed foreign institutional investors (FIIs) in their stake in the Nifty50 index.
According to data from Motilal Oswal Securities, as of the December 2025 quarter, DIIs held approximately 24.8% of the Nifty50, while FIIs held about 24.3%.
Analysts indicate that FII participation has reached its lowest level in the past eight quarters, while domestic capital investment has strengthened. They suggest that this shift is not temporary but rather structural in nature.
Previously, domestic investors had outpaced foreign investors in the overall equity market, but they lagged in key indices like the Nifty50—until now.
Market experts attribute the rapid growth in domestic investment to a projected ₹3.34 lakh crore in SIP investments by 2025, increasing participation from pension funds, and the emergence of new asset management companies.
Additionally, investments from the Employees’ Provident Fund Organization (EPFO) and insurance companies have bolstered domestic institutional investment. Experts believe that while this trend may weaken during market downturns, it will not reverse.
Over the past five years, domestic investors have driven significant market returns, whereas foreign investors have sold off approximately ₹9.96 lakh crore during the same period.
Brokerage data shows that FII stakes in the Nifty50 have decreased by 90 basis points year-on-year and by 20 basis points on a quarterly basis. In contrast, DII stakes have increased by 170 basis points annually and by 30 basis points quarterly.
In this quarter, foreign investors reduced their stakes in about 78% of Nifty50 companies, while domestic investors increased their investments in approximately 82% of these companies.
In terms of value, the total assets of domestic institutional investors stand at around $24.8 billion, surpassing the $24.3 billion held by foreign investors.
In 2025, domestic investors made substantial investments totaling ₹7.44 lakh crore, while foreign investors sold off ₹1.66 lakh crore. Despite this, the Nifty delivered only a 10% return.
A recent report attributes this modest return to weak corporate earnings and high stock prices. However, positive factors like the India-U.S. trade deal could potentially reverse sentiments, encouraging foreign investors to return.
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