DII close to FPI in companies’ stake case

The investment distance between foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) in terms of companies’ stake is very low. At the end of December 2024, the difference in ownership control of these two decreased to 33 base points. This is the lowest difference between the two after 2009.
People who monitor the market move say that after the heavy selling of foreign funds in January, the ownership of DII may have exceeded FPI. Last month, FPI sold shares worth Rs 78,000 crore while DII invested more than Rs 86,000 crore in domestic shares. The difference in ownership between FPI and DII increased to 1,032 base points in March 2015. Since then, FPI has steadily reduced its stake in Indian shares. But in contrast, the DII got strength from the increasing popularity of the common people, especially due to the increasing popularity of mutual funds and became a big player in the Indian stock market.

Managing Director Pranav Haldia in the Prime Database Group said, ‘This is a notable moment for the Indian capital market. For the past several years, FIIs have been the largest non-propagable category and their decisions related to investment have been affecting the direction of the entire market. According to the prime database report, DII stake in market capitalization of all companies listed in NSE at the end of December 2024 quarter. Meanwhile, FPI’s stake was reduced to the lowest level of 12 years to 17.23 percent. This change came to see the change after a purchase of Rs 1.86 lakh crore from domestic institutions during the three -month period ended in December and selling of FPIs more than Rs 1 lakh crore.

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In terms of price, DII had shares worth Rs 73.5 lakh crore, which was just 1.9 percent less than FPI. This is an important change than a decade ago. The number of shares that DIIs had a decade ago had half the value compared to FPI. DII mainly consists of mutual funds, insurance companies and pension funds. Mutual funds have been an important participation in the growing impact of DII in the market, which was strengthened by the increasing participation of retail investors. At the end of December 2024, mutual funds had a record 10 percent stake in India’s market capitalization.

After the Kovid epidemic, both categories of equity funds have seen a huge rise in active and passive investment. In the absence of other means giving more returns amidst the bounce in the market, more than 3 crore new investors were associated with mutual funds. The equity AUM active in December 2019 was Rs 7.7 lakh crore, which increased to Rs 31 lakh crore in December 2024. Meanwhile, the investment through the Systematic Investment Plan (SIP) increased from Rs 8,518 crore to Rs 26,459 crore.
However, the ownership of insurance companies has decreased. For example, LIC’s share was 3.59 percent in September 2024, which was reduced to 3.51 percent in December. The total stake of insurance companies decreased from 5.21 percent to 5.16 percent.

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