FPI ownership hits 15-year low as DIIs lead in FY26

What changed in India’s market ownership

Foreign Portfolio Investor (FPI) ownership has been trending down for nearly three years, with declines seen in all but two of the last 11 quarters since March 2023. Multiple ownership snapshots from the National Stock Exchange (NSE) and related coverage point to the same direction of travel. FPIs are still large holders in value terms, but their share of Indian equities has shrunk as domestic pools have expanded faster. The shift matters because it changes who absorbs selling pressure during global risk-off phases. It also reduces the market’s sensitivity to abrupt foreign flow reversals. The latest data points place foreign ownership at multi-year lows across key baskets such as NSE-listed companies and the Nifty indices.

FPI share slips further across NSE-listed companies

FPI ownership in NSE-listed companies fell to 16.9% in Q2 FY26 (September 2025 quarter), described as the lowest level in over 15 years. NSE noted that, barring a marginal uptick in two quarters, FPI ownership has declined steadily since March 2023. In the first half of FY26 alone, FPI ownership slipped by 63 basis points to reach 16.9%. The same period also saw commentary linking the move to volatility in foreign capital flows and global risk aversion. Some reports also pegged FPI ownership at 16.7% by value in Q2 FY26, reinforcing that the foreign share had fallen to a 13-year low band. Overall, the ownership trend is being framed as structural rather than a single-quarter blip.

Benchmark indices show multi-year lows for foreign share

The weakness in foreign shareholding was also visible in the headline indices. One data point showed FPI share in the Nifty 50 declining by 25 basis points sequentially to 23.8%, described as a more than 13-year low. Separately, NSE’s ownership tracker coverage showed Nifty 50 foreign ownership at 24.1%, down 43 basis points sequentially, also at a 13-year low. On the broader market, Nifty 500 foreign ownership was cited at 18.0% (down 46 basis points QoQ) and elsewhere as broadly stable at 18.1%. The common message is that even where the Nifty 500 moved less, foreign ownership remained near multi-year lows. The gap between falling ownership percentages and rising market capitalisation is now a defining feature of this cycle.

Holdings value rises even as ownership share falls

Despite the lower ownership share, the value of FPI holdings increased in some periods as prices and market size grew. FPI investments in NSE-listed firms rose 4.6% sequentially to ₹7,870,000 crore as of December 31, 2025. Over time, their investments were described as growing at about 16.5% annually, slightly faster than the market’s 15.8% growth rate. In the Nifty 50 specifically, FPI holdings increased 5.5% quarter-on-quarter to ₹5,020,000 crore even as ownership share declined. At the same time, for the September 2025 quarter, foreign holdings were also cited as falling 5.1% QoQ to ₹7,520,000 crore, with a reported outflow of $1.7 billion (roughly ₹77,000 crore). These data points, taken together, show that quarter-to-quarter value can move differently depending on the period measured, while the longer-run ownership share has still drifted lower.

Retail investors surpass FPIs in ownership share

Domestic participation has been building fast enough to overtake foreign ownership in key measures. Individuals were cited as accounting for 18.6% of India’s listed market capitalisation, down 13 basis points QoQ from a 22-year high, but still higher than FPIs for the fifth consecutive quarter. Another NSE Market Pulse snapshot put individuals’ combined direct and mutual fund ownership at 18.75%, the highest in 22 years. The reversal is sharp when compared with the past: FPIs had an 11 percentage-point lead over individuals in March 2014, which has now flipped to a -1.9 percentage point gap. Retail ownership outside the top 10% of companies by market capitalisation also rose 48 basis points QoQ to a 19-year high of 16.7%, pointing to stronger participation in mid- and small-caps. Household equity wealth was cited as rising by ₹5,300,000 crore since April 2020, with a five-year CAGR of 29.8%.

DIIs and mutual funds cushion foreign selling

Domestic institutional investors (DIIs) have been positioned as the stabilising counterweight to foreign selling. By Q2 FY26, DIIs were cited at 18.3% ownership of NSE-listed equities by value, overtaking foreign investors at 16.7%. Another data point showed DII ownership in NSE-listed equities at 18.7% by September 30, 2025, again above the 16.9% FPI share. Domestic mutual funds alone were reported at a record 10.9% ownership, an all-time high, and the September quarter was described as the ninth straight quarter of record mutual fund ownership. Mutual funds invested ₹164,000 crore in Q2 FY26, termed the highest quarterly investment ever recorded, supported by systematic investment plan (SIP) inflows averaging ₹28,697 crore per month. Active schemes increased ownership to 9.0%, while passive funds held steady at 2.0%.

Flow picture in FY26: equities out, debt in

Flow data in FY26 helps explain why ownership has shifted. FPIs were net sellers of Indian equities for most of FY26, with cumulative equity outflows of ₹16,500 crore as of January 13, 2026. The quarter-wise pattern was mixed: in Q1 FY26, FPIs were net buyers of equities and net sellers of debt. In Q2 and Q3 FY26, the trend reversed, with FPIs selling equities but turning buyers of debt. Overall, FPIs were net sellers of Indian securities from April to December 2025, and coverage summarised the period as an exit from Indian equities on balance. The combination of equity selling and domestic accumulation is what widened the DII-FPI ownership crossover.

Sector allocation shifts: IT cut, consumption raised

Ownership changes were not uniform across sectors. FPIs sharply reduced allocation to Information Technology, with the sector weight falling 1.25 percentage points QoQ to a record low of 7.9% in the September 2025 quarter. The IT cut was described as the third consecutive quarterly decline and a cumulative drop of 6.6 percentage points over the past 15 quarters. Marginal reductions were also observed in Energy and Real Estate. Offsetting these moves, Consumer Discretionary exposure rose by 1.4 percentage points to a record 12.7%. The reported pattern aligns with a rotation away from export-oriented exposure and toward domestic consumption themes.

Key numbers at a glance

Why the ownership shift matters for markets

The data collectively point to a structural change in Indian equity ownership. Even when the rupee value of foreign holdings rises, the foreign share can fall if domestic flows expand faster. The rise in DII and retail participation reduces dependence on volatile global capital and can cushion drawdowns during foreign selling episodes, as seen in the narrative around mutual funds and insurance companies buying consistently. It also changes index-level ownership dynamics, with FPIs holding a smaller share of key benchmarks than in prior cycles. At the same time, sector-level reallocations show that foreign positioning can still influence relative performance, particularly in export-linked sectors such as IT.

Conclusion

FPI ownership has continued to drift lower since March 2023, reaching 16.9% in NSE-listed companies and multi-year lows across the Nifty 50 and Nifty 500 in FY26 tracking. Meanwhile, DIIs and retail investors have expanded their footprint, supported by record mutual fund ownership and steady SIP-backed inflows. The latest flow data through January 2026 shows equity outflows from FPIs alongside stronger domestic absorption. The next set of quarterly ownership updates and flow disclosures will show whether the crossover persists as global rates, currency pressures, and risk appetite evolve.