Domestic Institutional Investors Increase Stake As FPI Ownership Dips To 12-Year Low
Retail investors, an increasingly significant segment, have 8.7% ownership, though slightly lower than their peak of 9% in the March 2022 quarter.
The share of foreign portfolio investors in the NSE-500 companies dropped to 18.8% in the June 2024 quarter, marking its lowest level in nearly 12 years, according to a report by DAM Capital released on Friday.
In contrast, domestic institutional investors now account for a record-high 16.9% share. Retail investors, a growing and increasingly significant segment, have 8.7% ownership, though this is slightly down from their peak of 9% in the March 2022 quarter.
More notably, the influence of FPIs in the Indian market has been steadily declining. Since March 2021, FPI free float ownership has decreased in almost every quarter, with only two instances of increases. As of June 2024, FPI free float ownership stood at 39%, down from a peak of 48%.
In contrast, domestic investors (DIIs and individuals) now control nearly 53% of the market float, with DIIs accounting for around 35% and individual investors about 18%.
Since 2019, domestic holdings have consistently overtaken FPIs, effectively countering FPI outflows during post-Covid global market sell-offs, such as those triggered by Fed rate hikes and geopolitical tensions.
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Key Highlights Of NSE-500 Ownership For June Quarter
FPI in the Indian market witnessed a quarter-on-quarter decline of approximately 30 basis points, bringing it down to 18.8% with a total value of $843 billion. The Nifty-50 index experienced a sharper decline, with FPI holdings dropping by around 40 bps quarter-on-quarter to 24.5%.
In contrast, the midcap and smallcap segments witnessed modest increases in FPI ownership, rising by 22 bps and 15 bps, respectively, bringing current holdings to 16% for midcaps and 12.4% for smallcaps.
The ownership of domestic institutional investors rose by about 30 basis points quarter-on-quarter to 16.9%, following a stable trend over the previous two quarters.
The stake in the DIIs increased across all market segments, with the most significant rise being seen in the large-cap segment (Nifty-50), which grew by approximately 60 bps to 20.7%.
Mid caps and small caps also saw increases of around 28 bps and 16 bps, reaching 16.5% and 12%, respectively. The total value of DII holdings is estimated at $758 billion.
Retail ownership experienced a slight decline, dipping to 8.7% from 8.8% in the previous quarter. The mid-cap segment recorded the most significant drop of about 30 bps quarter-on-quarter to 9.7%.
Meanwhile, Nifty-50 holdings remained stable at 8.1%, and small-cap holdings saw a minor increase of around 10 bps, reaching 9.3%. The total value of individual investor holdings stood at $392 billion.
Sectoral Ownership Trends
In the June quarter, both FPIs and DIIs increased their stakes in capital goods, consumer services, power, and realty sectors for the fourth consecutive quarter. Autos and telecom also exhibited similar trends, with minor reductions being disregarded.
Conversely, both FPIs and DIIs reduced their stakes in the FMCG sector for four straight quarters. Additionally, the financial sector experienced a decline in stakes over the past three quarters.
A turnaround was observed in the chemicals sector, where FPIs showed a minor uptick in stakes after three quarters of selling.
Meanwhile, the healthcare sector saw a reduction in interest, with both FPIs and DIIs reducing their stakes slightly after three quarters of buying.
