Domestic investor holding in Indian equities has hit a fresh all-time high, even as foreign portfolio investor (FPI) holdings declined to a 10-year low, a report by Business Standard stated.
Their holdings rose to 24.03 percent as on September 30 this year, up from 23.54 percent at the end of the preceding quarter, said the report, quoting data from PRIME Infobase.
It is important to note that domestic investors include institutional investors, mutual funds (MFs), insurance companies, banks, financial institutions, pension funds, retail, and high-networth individuals (HNIs).
The rise in holdings comes on the back of net inflows from DIIs of ₹17,597 crore during the July-September quarter, informed the report.
Meanwhile, BS pointed out that FPI holdings declined to a decade low of 19.03 percent in the September quarter- a decline of 17 basis points from 19.2 percent as on June 30 this year.
"As on March 31, 2015, the FPI share was 23.3 percent, while the combined share of DIIs, retail, and HNIs was just 18.47 percent. A bulk of the decline occurred between October 2021 and June this year, when FPIs wrenched off the record $33 billion from the domestic market," explained BS.
Independent equity analyst Ambareesh Baliga said strong domestic buying helps markets from declining sharply, notwithstanding heightened volatility. “The trend of domestic investors holding the market is likely to persist unless FPIs come back in a big way,” said Baliga.
It further stated that the FPI-to-DII ownership ratio declined to an all-time low of 1.29 on September 30 this year, from 1.37 on June 30 this year.
Strong investments by MFs have largely underpinned the increase in DII holdings.
The holdings of domestic MFs in the National Stock Exchange-listed companies rose for the fifth quarter to reach an all-time high of 7.97 percent as of September this year, riding on net inflows by domestic MFs to the tune of ₹22,193 crore during the quarter, added the report.