DIIs now holding a larger share than FIIs in Nifty50: What it means for equity markets

Domestic institutional investors (DIIs) have surpassed foreign institutional investors (FIIs) in Nifty50 holdings. As of December 2025, FII stakes dropped 90 basis points year-on-year (YoY) and 20 basis points (bps) quarter-on-quarter (QoQ) to 24.3 per cent, according to Motilal Oswal Financial Services Ltd (MOFSL).

This development highlights surging domestic participation amid the recent FII caution. “DIIs now holding a larger share than FIIs in Nifty50 underscores a fundamental shift toward stronger domestic participation in India’s equity markets. This reflects the growing strength of domestic capital pools. The change has been driven by sustained mutual fund SIP inflows, rising retail participation, and steady allocations from insurance and pension funds, even as FIIs turned cautious amid global macro uncertainty, elevated overseas rates, and a stronger dollar,” noted Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.

“The increasing dominance of domestic money provides a more stable, long-term source of liquidity, reduces reliance on volatile foreign flows, and could help cushion markets during global risk-off phases, ultimately making India’s equity market structure more resilient and aligned with domestic growth fundamentals,” he also said.

“This is a remarkable milestone for India’s equity markets. It reflects the coming of age of the retail investor, whose patient, long-term capital is increasingly strengthening domestic markets. The fact that monthly SIP flows have continued to rise even through a phase of relatively muted returns underscores both growing maturity and the ongoing financialisation of household savings. This trend appears structural and should further anchor the Indian markets domestically,” said Varun Gupta, CEO at Groww Mutual Fund.

Meanwhile, NSE data showed that FIIs net bought shares worth Rs 2,254.64 crore on Monday, while DIIs purchased equities worth Rs 4.15 crore.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, has mentioned that February has marked a discernible change in FII behaviour.