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The share of institutional investors in Nifty 50 stocks fell to a record low of 56.1 per cent in the first quarter of FY27, declining by 3.1 percentage points from the previous quarter, according to the NSE Market Pulse report for August.
The decline in institutional allocation to Nifty 50 stocks has reached 4.8 percentage points in the first half of 2026. The current allocation is also 16.3 percentage points below the pre-pandemic peak of 72.4 per cent recorded in December 2019. NSE report stated, "Institutional allocation shifted further away from Nifty 50 to mid- and small-cap stocks. Institutional allocation to Nifty 50 stocks fell further by 3.1pp QoQ to a record low of 56.1 per cent in Q1 FY27." The report said the decline highlights a continued shift in institutional investment beyond large-cap stocks. Individual investors also reduced their allocation to Nifty 50 stocks during the quarter. Their allocation fell by 3.1 percentage points from the previous quarter to a record low of 33.4 per cent. The shift was also visible when the market was divided into different groups based on market capitalisation. Domestic mutual fund allocation to the largest group of stocks fell by 4.3 percentage points quarter-on-quarter to 83.5 per cent. Foreign portfolio investors (FPIs) also reduced their allocation to the largest group of stocks by around 3 percentage points to a six-year low of 89 per cent. Individual investors similarly reduced their exposure to the largest companies, while their allocation increased across other groups of stocks. According to the report, this indicates a renewed shift towards mid-cap, small-cap and micro-cap stocks during the quarter. The report also highlighted a broader change in institutional ownership since the pandemic, with institutional investors spreading their investments across a larger number of listed companies. This trend has been particularly visible among FPIs. The number of NSE-listed companies with FPI ownership increased from around 1,200 in December 2020 to more than 1,450 by the end of 2021 and over 1,770 by the end of 2022. FPI coverage then temporarily declined to around 1,450 companies in the fourth quarter of FY23. However, it subsequently resumed its upward trend and now exceeds 2,000 companies. At the same time, the report noted that the wider spread of FPI investments has come with greater selectivity in the size of individual holdings. The report said the trend shows that FPIs are now investing in a much wider set of companies, while larger ownership stakes continue to remain concentrated in a relatively smaller part of their overall portfolio. (ANI)
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