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Indian equity markets have seen a major shift in the last 10 years, with domestic investors playing a much bigger role than before.
According to a report by Motilal Oswal, domestic institutional investors (DIIs) have invested USD 195 billion in Indian equities between FY15 and FY25. This is 3.7 times higher than foreign institutional investor (FII) inflows of USD 53 billion during the same period. The report said, "In line with these trends, DIIs invested USD195b, which is 3.7x the FII inflows of USD53b during the decade". It also added that the change has been taking shape over the last decade but gained strong momentum after FY21. The report highlighted that this period was marked by several ups and downs, including the Covid-19 pandemic, higher global interest rates, and rising stock valuations in India. Despite these challenges, Indian investors continued to pour money into the markets. The increased domestic participation also changed the sectoral investments ratios owned by institutions. Within the Nifty-500 index, the sector-wise shareholding saw interesting trends over the past year. FIIs held the highest stake in Private Banks at 47.5 per cent, followed by Telecom (22.5 per cent), Real Estate (21 per cent), NBFC - Non Lending (20.5 per cent), Technology (19.5 per cent), Healthcare (18.7 per cent), and Consumer (18.6 per cent). On a year-on-year basis, FIIs increased their investments in NBFC - Non Lending by 400 basis points, EMS by 220 basis points, Telecom by 200 basis points, Real Estate by 170 basis points, and Infrastructure by 70 basis points. On the other hand, DIIs had the highest shareholding in Private Banks (33.1 per cent), Consumer (23.9 per cent), Oil & Gas (21.3 per cent), Consumer Durables (20.9 per cent), and Metals (20.7 per cent). Over the year, DIIs increased their stakes in Private Banks by 340 basis points, Consumer Durables by 290 basis points, Consumer by 230 basis points, Utilities by 220 basis points, and PSU Banks by 220 basis points. In terms of investment preference, DIIs were overweight on Consumer, Oil & Gas, and Metals sectors. However, they remained underweight on Private Banks, NBFCs, and Real Estate. The report clearly showed how domestic investors have become a dominant force in shaping India's equity markets over the last decade. (ANI)
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