A Motilal Oswal report reveals a major shift in Indian equities. DII holdings in Nifty-500 firms hit a record 21%, while FII ownership dropped to a historic low of 17%. This highlights the growing dominance of domestic capital in the market.

Domestic institutional investors (DIIs) have strengthened their dominance in the Indian equity market, with their holdings in Nifty-500 companies rising to a record high of 21 per cent, while foreign institutional investor (FII) ownership has declined to an all-time low of 17 per cent, according to a report by Motilal Oswal Financial Services.

The report highlighted a structural shift in institutional ownership that has been building momentum over the past few years, led by sustained domestic inflows into equities. "This structural shift in institutional ownership, which has gained momentum since 2021, continues to strengthen as DII holdings scale new peaks, accounting for 21 per cent of Nifty 500 companies in run rate," the report said.

Institutional Ownership by the Numbers

According to the report, DII ownership in Nifty-500 companies increased by 160 basis points year-on-year and 20 basis points sequentially to touch an all-time high of 21 per cent in June 2026. During the same period, FII ownership declined by 190 basis points year-on-year and 10 basis points quarter-on-quarter to 17 per cent from 18.9 per cent in June 2025, marking the lowest level on record.

The report noted that domestic investors have steadily increased their participation in Indian equities even as foreign investors have reduced their holdings over the past few years, resulting in a significant change in the ownership structure of listed companies.

Promoter and Retail Holdings

Motilal Oswal also pointed to a reversal in promoter ownership trends. "Promoter holdings, which have historically remained range-bound, experienced an increase of 20bp YoY (+10bp QoQ) to 49.5 per cent in Jun'26," it said. Meanwhile, retail ownership witnessed a marginal sequential decline. "Retail holdings dipped 10bp QoQ to 12.6 per cent in Jun'26 (+20bp YoY)," the report added.

The report further showed that domestic institutions now hold a larger share of the market than foreign investors across the Nifty-500 universe, underlining the growing role of domestic capital in supporting Indian equities.

Sector-Wise Investor Preferences

Sector-wise, foreign institutional investors held the highest proportion of free-float holdings in Real Estate (49 per cent), followed by Private Banks (45 per cent) and Telecom (43 per cent) as of June 2026. On the other hand, domestic institutional investors had the highest free-float ownership in PSU Banks (56 per cent), followed by Consumer (49 per cent), Oil & Gas (46 per cent) and Insurance (45 per cent).

The report suggests that the increasing share of domestic institutional investors, coupled with declining foreign ownership, reflects a broad-based structural shift in India's equity ownership pattern, with domestic capital playing an increasingly important role in driving the country's stock markets. (ANI)

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