DIIs Overtake FIIs in Nifty 50: SIP Flows Reshape India’s Equity Markets

Domestic institutional investors (DIIs) have overtaken foreign institutional investors (FIIs) in the ownership of India’s benchmark Nifty50 index, marking a significant structural shift in the country’s equity market. This change highlights the rising influence of domestic capital, driven by sustained mutual fund SIP inflows, increasing retail participation, and steady investments from insurance and pension funds.

Market Performance

As of the December 2025 quarter:

• DIIs held approximately 24.8% of the Nifty50, slightly higher than FIIs at 24.3%.
• In value terms, domestic institutions had assets under custody of around $24.8 billion, surpassing foreign holdings of $24.3 billion.
• Incremental SIP inflows during 2025 reached ₹3.34 lakh crore, reflecting growing retail participation.
• Long-term domestic pools, including pension funds, continued to support equity inflows.

This shift is also evident in the broader market. Within the Nifty500 universe:

• DII holdings climbed to 20.6%, a new peak.
• FII ownership remained relatively stable at 18.4%.

Key Trends Driving Domestic Dominance

The data points to a clear divergence in investment behavior between domestic and foreign investors:

• During Q4 CY25, FIIs reduced stakes in 78% of Nifty50 constituents, while DIIs increased holdings in 82% of index stocks.
• Total DII investments in equities during 2025 amounted to ₹7.44 lakh crore, while FII selling totaled ₹1.66 lakh crore.
• In Q4 CY25 alone, DIIs pumped $23.4 billion into Indian equities.

Domestic capital has steadily absorbed FII outflows and supported primary market issuances worth ₹1.95 trillion, underscoring its growing influence in the equity market ecosystem.

How SIP Flows Are Reshaping the Market?

SIP inflows have become a consistent and predictable source of liquidity. This reduces dependency on volatile foreign flows and strengthens the domestic equity market structure. Key observations include:

• Monthly SIP contributions continued to rise throughout 2025, even as market returns remained moderate.
• The Nifty50 delivered roughly 10% returns in 2025 despite unprecedented domestic buying.
• DIIs have been key participants in stabilizing markets, particularly during global uncertainty and periods of FII caution.

The increasing share of domestic capital is creating a more resilient and stable market framework, reducing the impact of external shocks and aligning equity markets more closely with domestic economic fundamentals.

Company & Investment Summary

• DIIs: 24.8% of Nifty50 holdings, assets under custody ~$24.8B
• FIIs: 24.3% of Nifty50 holdings, assets under custody ~$24.3B
• SIP Inflows (2025): ₹3.34 lakh crore
• Total DII Investments (2025): ₹7.44 lakh crore
• Total FII Outflows (2025): ₹1.66 lakh crore
• Primary Market Issuances Absorbed: ₹1.95 trillion

Conclusion

The shift in ownership of the Nifty50 from FIIs to DIIs represents a pivotal moment in India’s equity market. With domestic capital becoming the dominant force, Indian markets are gradually reducing their reliance on foreign flows, strengthening stability, and enhancing predictability. The role of SIPs, pension funds, and insurance investments in this transition underscores the ongoing financialization of household savings and the growing influence of domestic investors in shaping market trends.

Source: Livemint