DIIs Overtake FIIs in Nifty 50 Ownership: Record Highs

Domestic Institutional Investors (DIIs) have significantly increased their ownership in India’s largest stocks, with their Nifty 50 holdings reaching a record 25.9% by the end of June. This marks a notable shift as Foreign Institutional Investors (FIIs) simultaneously reduced their stakes, positioning DIIs with a 3.2-point lead in the index.

Key Ownership Figures

• FIIs reduced holdings in 36 Nifty 50 companies.
• DIIs increased stakes in 41 Nifty 50 companies.
• DII ownership rose by 2.1 percentage points to 25.9%.
• FII ownership fell by 2.4 percentage points to 22.7%.

This substantial ownership transfer occurred over the year ending June, with DIIs actively acquiring shares as foreign investors scaled back their positions.

Sectoral Investment Patterns

The shift was particularly pronounced across new-age, healthcare, and financial stocks, reflecting a strategic rebalancing by institutional players. Max Healthcare Institute experienced the most significant change.

• In Max Healthcare, FII holdings decreased by 13 percentage points to 41.8%.
• DII ownership in Max Healthcare simultaneously rose by 12.5 percentage points to 30%.
• FIIs cut stakes in InterGlobe Aviation and Eternal, along with major private banks like ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and Axis Bank, while DIIs increased their positions.
• Healthcare stocks such as Cipla, Dr. Reddy’s Laboratories, and Sun Pharmaceutical Industries also saw DIIs increasing their holdings as FIIs reduced theirs.
• A similar trend emerged in technology stocks including Infosys, Tech Mahindra, HCL Technologies, and Tata Consultancy Services, though Wipro was an exception with a marginal FII increase and DII decrease.

The selling pressure from FIIs pushed technology’s share of overall FII allocations in the Nifty 500 to a record low of 5.6%.

Divergent Strategies Across Sectors

While often on opposing sides, FIIs and DIIs occasionally exhibited different strategies within specific sectors. FIIs notably increased their stakes in Hindalco Industries, Coal India, and Adani Ports, even as DIIs reduced their holdings in these same companies.

• FIIs reduced holdings in 19 of 24 Nifty 500 sectors, with the biggest cuts in private banks, technology, and real estate.
• FIIs increased stakes in only five sectors: logistics, metals, PSU banks, lending NBFCs, and capital goods.
• DIIs increased ownership in 19 sectors, making significant additions in private banks, telecom, real estate, technology, and healthcare.

The broader Nifty 500 index also reflected this trend, with DII holdings rising for the ninth consecutive quarter to a record 21% in June, while FII ownership fell to a new low of 17%.

Broader Market Trends and Long-Term Flows

• Since September 2024, FIIs have withdrawn a cumulative $58 billion.
• DIIs have invested a record $166 billion over the same 22-month period.
• Average monthly systematic investment plan (SIP) inflows supported this with approximately $3 billion.

Over the past decade, DIIs have consistently increased their share of the Nifty 50, ultimately surpassing FIIs in overall ownership.