Record Highs for Mutual Funds and Retail Investors in NSE Stocks
Domestic mutual funds (MFs) have reached an unprecedented high in their holdings of companies listed on the National Stock Exchange (NSE). Mutual funds now hold 9.17% of NSE-listed companies, up from 8.93% in the previous quarter, driven by robust net inflows exceeding ₹1 lakh crore. Meanwhile, the Life Insurance Corporation of India (LIC), the largest institutional investor in the country, saw its share in 282 companies fall to a record low of 3.64%, down from 3.75%. Despite LIC’s net buying of ₹12,400 crore during the period, its overall share in equity investments continued to decline. Insurance companies also saw their total holdings drop from 5.40% to 5.23%.
Domestic Investors’ Growing Influence
The total share of domestic institutional investors (DIIs) increased to 16.23%, a rise from 16.07% in the previous quarter. On the other hand, foreign institutional investors (FIIs) have been withdrawing funds, bringing their holdings down to a 12-year low of 17.38%. This shift has narrowed the gap between domestic and foreign holdings, with DIIs holding just 6.60% less than FIIs. The FII-to-DII ownership ratio has dropped to a record low of 1.07, a significant shift from its peak of 1.99. In March 2015, the gap between FII and DII holdings was widest, with DIIs holding 49.82% less than FIIs. This change reflects the increasing dominance of domestic investors in the Indian stock market.
Retail Investors and Sectoral Changes
Retail investors and high net worth individuals (HNIs) have continued to grow their presence in the market, reaching a combined share of 25.85%. Retail investors saw their share increase to 7.64%, up from 7.52%, while the share of HNIs slightly declined from 2% to 1.98%. Overall, the influence of these investors has risen. Sectoral shifts show that DIIs have increased their allocation to the Commodities sector, while reducing their investments in the Energy sector. FIIs, meanwhile, have boosted their investments in the Consumer Discretionary sector and reduced their exposure to the IT sector.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.