FII Holdings Plunge to 14-Year Low Amidst MF Record High

Foreign Institutional Investor (FII) holdings in Indian companies fell to a 14-year low of 15.88% by June 30, 2026. This marks a decrease from 16.12% recorded on March 31, 2026, driven by FIIs becoming net sellers during the June quarter.

Key Ownership Shifts

• FII holdings: 15.88% as of June 30, 2026.
• FII withdrawal: Rs 1.43 lakh crore during the June quarter.
• Domestic Mutual Fund (MF) holdings: 11.58% as of June 30, 2026, an all-time high.
• MF equity deployment: Rs 1.42 lakh crore during the period.

Conversely, domestic mutual funds (MFs) consistently increased their stake in National Stock Exchange (NSE) listed companies for the twelfth consecutive quarter. Their ownership reached an all-time high of 11.58% by June 30, 2026, fueled by robust systematic investment plan (SIP) inflows.

MFs deployed a net of Rs 1.42 lakh crore into equities during the period, supported by approximately Rs 30,000 crore in monthly SIP inflows. This strong domestic participation has significantly narrowed the ownership gap between FIIs and mutual funds.

Narrowing Ownership Gap

The ownership gap between FIIs and MFs shrank by 37 basis points in the quarter ending June 30, settling at 4.30%. This contrasts sharply with the peak gap of 17.14% observed in March 2015, indicating a structural shift in market dynamics.

Pranav Haldea, Managing Director of PRIME Database Group, noted that Domestic Institutional Investors (DIIs), along with Retail and High Net-worth Individuals (HNIs), have provided a crucial countervailing force. Their combined share reached an all-time high of 28.66%.

Institutional Investor Activity

• Overall DII holdings: Slight dip to 19.15% from 19.24%.
• Insurance companies’ aggregate share: Reduced to 5.16%.
• Life Insurance Corporation of India (LIC) holding: Fell to an all-time low of 3.48% across 284 companies.
• LIC net purchases: Rs 8,137 crore.

Haldea further highlighted the diminishing dominance of FIIs in the Indian capital market, reinforcing the market’s growing ‘Atmanirbharta’ (self-reliance). He anticipates that mutual funds alone are poised to surpass FIIs in terms of ownership in the upcoming quarters.

Sectoral Reallocation and Government Stake

DIIs increased their exposure to industrials from 9.05% to 10% while decreasing information technology holdings from 7.55% to 5.83%. FIIs, conversely, expanded their allocation to financial services from 30.78% to 33.23% and reduced information technology exposure from 6.19% to 4.76%.

The central government’s promoter share declined to a three-year low of 8.83%. This followed net sales amounting to Rs 19,468 crore executed through offers for sale.