DIIs Hold 18.7% of NSE-Listed Equities, FII Holdings Drop to 13-Year Low: Economic Survey 2026

Domestic institutional investors (DIIs) have steadily strengthened their position in Indian equity markets, providing a stabilizing influence amid fluctuating foreign capital flows. According to the Economic Survey 2026-2027, tabled by the Finance Minister on January 29, 2026, DIIs now hold 18.7% of equities listed on the National Stock Exchange (NSE).

This trend marks a significant shift in market dynamics, reflecting the growing influence of domestic capital in shaping market stability and resilience.

Market Performance Overview

• DIIs Holdings: 18.7% of NSE-listed equities as of September 30, 2025
• FII Holdings: Declined to 16.7% — a 13-year low
• Trend: DII holdings surpass FII for the first time in Q4 FY25
• Impact: Domestic buying offsets foreign outflows, reinforcing market stability

The Survey underscores that DIIs, particularly mutual funds and insurance companies, have consistently remained net buyers of equities. This steady domestic demand has cushioned the market against periods of foreign portfolio investor (FPI) selling, reducing volatility and supporting investor confidence.

Shifts in Ownership Patterns

A clear structural transformation in equity ownership is emerging:

• In Q4 FY25, the total value of DII holdings surpassed FII holdings for the first time.
• In Q2 FY26, DII share rose to an all-time high of 18.3%, while FII holdings slid further.
• This indicates a long-term shift towards greater domestic market participation.

The data also reveal that FPI flows in FY26 (April-December) have been highly influenced by global financial conditions rather than domestic macroeconomic trends. This resulted in:

• Six months of net outflows
• Three months of sizable net inflows
• A modest net balance for the year-to-date

Company and Sector Impact

While the Economic Survey does not single out individual companies, this rise in DII participation highlights increased domestic engagement across sectors listed on the NSE. Markets are now more insulated from sudden foreign outflows, creating a smoother trading environment for investors and market participants.

Summary

The 2026 Economic Survey paints a clear picture:

1. Domestic Strength: DIIs are emerging as a key stabilizing force in equity markets.
2. Foreign Retreat: FII holdings have fallen to the lowest level in 13 years.
3. Market Resilience: Consistent DII inflows help counter foreign volatility.
4. Ownership Shift: The balance of power in equity holdings is tilting towards domestic institutions.

This structural change suggests that Indian equity markets are becoming more domestically driven, marking a turning point in the market’s evolution and reinforcing investor confidence in long-term growth.

Source: Moneycontrol