For a third consecutive year, domestic institutional investors have infused over Rs 5 trillion into Indian stocks, overtaking foreign funds and reshaping market ownership with record stakes across sectors.
Domestic institutional investors have poured more than Rs 5 trillion into Indian equities for a third straight calendar year, underlining the depth of local demand even as foreign funds have sold heavily. Stock exchange data show that, through August 7, domestic institutions had put in Rs 5.13 trillion, up from Rs 4.48 trillion in the same period last year. Over the same 36 months from August 2023, they have added Rs 19.21 trillion to equities, while foreign portfolio investors have offloaded Rs 10 trillion worth of shares.
The buying has been broad-based and has helped domestic investors become the main counterweight to overseas selling. Business Standard reported that domestic institutions include banks, domestic financial institutions, insurers, new pension schemes and mutual funds. In all of 2025, they invested Rs 7.88 trillion, following net inflows of Rs 5.26 trillion in 2024, a pattern that points to sustained retail- and institution-led participation in the market.
Analysts say the flow of money has been supported by a firmer economic backdrop, resilient goods and services tax collections and steady mutual fund inflows. U R Bhat, co-founder and director of Alphaniti Fintech, told Business Standard that there have been no major economic shocks despite tensions in West Asia and said he expects domestic flows to stay strong in the months ahead. Motilal Oswal Financial Services has also argued that easing geopolitical risk, softer energy prices, better earnings and lower valuations than the peaks seen in 2024 have improved the market’s risk-reward balance.
The shift has also reshaped ownership across the market. Moneycontrol reported that domestic investors increased their stakes in 22 of 24 Nifty 500 sectors in December 2025, while a separate report in March 2026 said their holdings in Nifty 500 companies reached a record 20.9%, with foreign ownership falling to 17.1%. In the June 2026 quarter, Motilal Oswal said domestic investors were overweight consumer, PSU banks, oil and gas, telecom, metals and technology, while remaining underweight private banks, NBFCs, capital goods, chemicals, real estate, healthcare and automobiles. The brokerage said HDFC Bank, ICICI Bank, Reliance Industries, ITC and State Bank of India were the largest holdings by value, together accounting for about a fifth of domestic institutions’ portfolio value.
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