Domestic Institutional Investors Surge Ahead in Indian Equities: A Record High

Domestic institutional investors (DIIs) have reached a record ownership of 20.9% in Nifty 500 firms by March 2026, while foreign institutional investors (FIIs) holdings declined. DIIs invested USD 27.2 billion, anchoring markets amid geopolitical tensions and volatile FII flows, which saw USD 15.8 billion in net outflows during the quarter.

Domestic institutional investors (DIIs) have solidified their position in the Indian equities market, reaching a record 20.9% ownership in Nifty 500 companies during the March 2026 quarter, according to a Motilal Oswal Financial Services report revealed on Tuesday. This development comes as foreign institutional investor (FII) ownership declined to 17.1%.

The report highlighted volatility in Indian equity markets for FY26, primarily due to global geopolitical tensions involving the Iran-Israel/US conflict. Nevertheless, domestic flows remained robust, with DIIs investing USD 27.2 billion between January and March 2026, backed by systematic investment plan (SIP) inflows. FIIs, on the other hand, experienced net outflows of USD 15.8 billion during the same period, exacerbated by massive selling of USD 14.2 billion in March.

The study noted a significant shift in institutional ownership, as the FII-DII ownership ratio in the Nifty 500 contracted to 0.8 times in March 2026. Interestingly, DIIs increased their exposure in 21 of the 24 sectors analyzed, with notable allocations in private banks, technology, telecom, real estate, healthcare, and NBFC-lending sectors.