DII ownership hits record in 2026 as FII stake drops

A structural shift in Indian equity ownership

Domestic institutional investors (DIIs) are steadily taking a larger share of Indian equities, while foreign institutional investors (FIIs) continue to reduce exposure. An Elara Securities report shows FII ownership in the Nifty 50 fell to a 12-quarter low of 22.8% in March 2026, down from 25.4% in June 2023. Over the same period, DII ownership in the Nifty 50 rose to a record 24.9% from 20.3%. The shift is visible across broader indices too, with DIIs now holding more than FIIs in the Nifty 500, midcaps, and smallcaps.

Elara Securities: FIIs lose ground across indices

Elara’s data indicates a broad-based decline in FII holdings in the March 2026 quarter across major indices. FII ownership stood at 17.6% in the Nifty 500, 13.8% in the NSE Midcap 150, and 11.2% in the NSE Smallcap 250. The report flags these as among the lowest levels seen in the past 12 quarters. Compared with June 2023, the drop is consistent: Nifty 500 FII ownership fell from 20.3% to 17.6%, the Midcap 150 from 15.5% to 13.8%, and the Smallcap 250 from 11.7% to 11.2%.

Why foreign ownership is falling

The report links sustained foreign selling pressure to multiple global and valuation factors. It cites geopolitical tensions, high US interest rates, concerns around a global economic slowdown, and elevated Indian market valuations. The combination has made overseas risk appetite more cautious. The ownership trend reflects positioning decisions rather than any single event. It also highlights that the decline is not limited to one market-cap segment.

Domestic institutions rise on SIPs, funds, and insurance flows

DII ownership has climbed steadily across the same period, with March 2026 holdings at 24.9% in the Nifty 50 and 19.9% in the Nifty 500, according to Elara. In the NSE Midcap 150, DII ownership was 16.8%, while the NSE Smallcap 250 stood at 15.5%. Versus June 2023, DII ownership rose from 16.7% to 19.9% in the Nifty 500, from 14.6% to 16.8% in the Midcap 150, and from 12% to 15.5% in the Smallcap 250. The report attributes the increase to record SIP inflows, higher mutual fund participation, insurance flows, and rising retail participation through systematic investing.

The crossover: DIIs now own more than FIIs

A key takeaway is the ownership crossover in headline indices. In the Nifty 50, Elara’s data shows DIIs at 24.9% versus FIIs at 22.8% in March 2026. In the Nifty 500, DIIs stood at 19.9% compared with FIIs at 17.6%. The gaps are wider in broader markets: in the Midcap 150, DIIs held 16.8% versus FIIs at 13.8%, and in the Smallcap 250, DIIs held 15.5% compared with FIIs at 11.2%.

Motilal Oswal: similar direction, different headline numbers

A separate note cited from Motilal Oswal also points to a structural shift, but with different ownership levels for March 2026. It said DIIs held 25.4% of the Nifty 50, the highest on record, while FII ownership dropped to 22.2%, described as a multi-year low. For the Nifty 500, it said DII ownership rose for the eighth straight quarter to an all-time high of 20.9%, while FII ownership slipped to 17.1%, the lowest level in a decade. The same note stated the FII-to-DII ownership ratio compressed to 0.8x from 1.7x in 2016.

Promoters recover, public ownership stays mixed

Elara reported promoter holdings recovered in March 2026 after declining over the previous four quarters, with promoter ownership at 41% in the Nifty 50, 49.4% in the Nifty 500, 54.9% in the Midcap 150, and 52.6% in the Smallcap 250. The report noted promoter ownership had touched lower levels in December 2025 before the recovery, pointing to reduced stake dilution and stabilisation in corporate ownership patterns.

Public and retail ownership trends were mixed. Public ownership in March 2026 stood at 11.3% for the Nifty 50, 13.1% for the Nifty 500, 14.4% for the Midcap 150, and 20.8% for the Smallcap 250. Retail participation remained strongest in smallcaps, where ownership was nearly double that of Nifty 50 companies.

Sector shifts: FIIs cut multiple defensives; DIIs add broadly

Elara’s sector data shows FII ownership fell in several major sectors between June 2023 and March 2026, including auto (20% to 17.9%), FMCG (23.1% to 16.5%), IT services (19.8% to 17.9%), real estate (18.6% to 17.8%), transportation (21.3% to 15.6%), and utilities (15.8% to 12.1%). It also noted FIIs increased exposure in selective sectors such as telecom, chemicals, metals, sugar, and textiles, with telecom FII ownership rising from 19.2% to 23.6%.

On the domestic side, Elara showed DII ownership increases across sectors, including IT services (15.8% to 23.6%), sugar (11.8% to 21.3%), real estate (9% to 12.9%), transportation (11.7% to 19.4%), auto (17.7% to 20.2%), and healthcare (16.7% to 20.2%).

Stock-level changes highlighted by the report

Elara also listed stock-level ownership shifts. It identified top FII additions as Sammaan Capital, Vishal Mega Mart, Hindustan Zinc, and MRPL (also referred to as Mangalore Refinery). Top FII reductions included Hexaware Technologies, IRCTC, Aavas Financiers, and Poly Medicure. Top DII additions included Urban Company, IRFC, Waaree Energies, Lodha Developers, and Aavas Financiers.

What the Economic Survey adds to the picture

The Economic Survey 2026-2027, tabled on January 29, 2026, also documented the growing role of domestic institutions. It said DIIs held 18.7% of NSE-listed equities as of September 30, 2025, while FII holdings declined to 16.7%, described as a 13-year low. The Survey also noted that the combined share of DIIs, retail investors, and high-net-worth individuals reached 27.8% by value of holdings in Q2 FY26. It added that DII share by value of holdings surpassed FIIs for the first time in Q4 FY25, and that the trend continued into FY26.

Key ownership data at a glance (Elara Securities)

Market impact: why ownership mix matters

The report argues that changing ownership structure is influencing market behaviour. Earlier, FIIs were a larger driver of rallies and corrections, and global risk sentiment had a stronger influence on near-term valuations. With higher SIP-led and institutional domestic flows, the market has a larger local liquidity base that can cushion volatility during foreign selling phases. The ownership crossover across indices is also changing how sector leadership emerges, given DIIs have raised stakes across multiple cyclical and domestic theme areas.

Conclusion

Multiple datasets in the report package point in the same direction: domestic institutional investors are gaining share across Indian equities, while foreign ownership has slipped to multi-quarter lows in several indices. Elara’s March 2026 snapshot shows DIIs ahead of FIIs in the Nifty 50 and Nifty 500, alongside rising holdings in midcaps and smallcaps. Motilal Oswal and the Economic Survey also highlight a broader ownership transition underway since FY25. The next set of quarterly shareholding disclosures and any update on FII flow trends will be key markers to track how durable this shift remains.