Domestic institutional investors (DIIs) have played a significant role by investing $23.4 billion in the fourth quarter of 2025 and $90.1 billion throughout the year. This investment trend was supported by consistent Systematic Investment Plan (SIP) inflows into domestic Mutual Funds (MFs). In contrast, Foreign Institutional Investors (FIIs) saw outflows amounting to $18.8 billion in 2025.
This active participation of DIIs not only offset the impact of FII outflows but also absorbed the continuous rise in primary market issuances, including Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs) totaling Rs 1.95 trillion for the year. The report by Motilal Oswal Financial Services Ltd highlighted a notable shift in institutional ownership dynamics, with DII holdings reaching 20.6% and FII holdings remaining steady at 18.4% in Nifty 500 companies.
The report emphasized the potential significance of a reversal in FII outflows as a key trigger for market dynamics. Over the past year, DII ownership surged to an all-time high of 20.6%, marking a 210 basis points Year-on-Year (YoY) increase. In comparison, FII ownership slightly decreased to 18.4%, down by 50 basis points YoY.
Promoter holdings witnessed a substantial decline to a historic low of 48.8% in December 2025, driven by the recovery in the primary market. This decline was attributed to attractive opportunities created by high valuations and strong investor demand, prompting several promoters to divest their stakes. DIIs notably increased their holdings across various sectors, with significant rises in EMS, Technology, Telecom, Retail, PSU Banks, and Healthcare sectors.
On a sequential basis, DIIs notably increased their stakes in NBFC – Non-Lending, Private Banks, Capital Goods, NBFC-Lending, and Consumer sectors. Meanwhile, FIIs increased their holdings in sectors like PSU Banks, Telecom, Oil & Gas, Chemicals, NBFC-Lending, Insurance, and Metals, both Quarter-on-Quarter (QoQ) and YoY.
