IGI Logo

FII & DII allocations in BFSI and global commodities climb

* Recent positives regain the narrative! CY25 ended with positive returns for Indian markets, despite significant volatility and record FII selling driven by geopolitical tensions and other headwinds. However, sentiment reversed swiftly following the announcement of the long-awaited Indo-US trade deal. Coming shortly after the Indo-EU Free Trade Agreement, these pacts—alongside earlier agreements with the UK, EFTA, and New Zealand—mitigate concerns regarding geopolitical isolation and underscore India’s strategic global relevance. Meanwhile, the Union Budget signaled fiscal continuity, meeting modest expectations without introducing immediate high-impact measures.

* DIIs, the mainstay,solidify their dominance on Indian equities: The Indian equity markets have been characterized by two distinct groups of investors. The domestic institutional investors have remained key bidders, pumping USD23.4b in 4QCY25 and USD90.1b in CY25 – aided by steady SIP inflows into domestic MFs. This strong participation has not only helped mitigate the effects of a spike in FII outflows, which totaled USD18.8b in CY25, but has also absorbed the continued surge in primary market issuances, with IPOs and FPOs amounting to INR1.95t for the year.

* This structural shift in institutional ownership, which has gained momentum since 2021, continues to strengthen as DII holdings reach new peaks, touching 20.6%, while FII holdings remain stable at 18.4% in Nifty 500 companies. We believe a reversal in FII outflows could be a key trigger.

* In this report, we explore their ownership across the Nifty-500 sectors and companies, analyzing how their holdings have evolved over time.

DII holdings in the Nifty-500 surge for the seventh consecutive quarter

* Over the past one year, DII ownership rose 210bp YoY (+60bp QoQ) to an all-time high of 20.6% in Dec’25. In contrast, FII ownership dipped 50bp YoY (+10bp QoQ) to 18.4% (vs. 18.9% in Dec’24).

* Promoter holdings, which have historically remained range-bound, continued to decline materially to an all-time low of 48.8% (-90bp YoY, -50bp QoQ) in Dec’25. This sharp dip was driven by a recovery in the primary market over the last three quarters, where high valuations and strong investor appetite have created an attractive opportunity for several promoters to liquidate their stakes. ? Retail holdings also dipped to 12.1% in Dec’25 (-60bp YoY, -20bp QoQ).

* Sectoral holding trends: Within the Nifty-500, FIIs and DIIs showcased divergent trends. On a YoY basis, DIIs raised their holdings in 22 out of 24 sectors. The maximum increase in holdings was visible in EMS, Technology, Telecom, Retail, PSU Banks, and Healthcare, while Media and Logistics sectors experienced a reduction in holdings. On a sequential basis, DIIs recorded the maximum increase in holdings in the NBFC – Non Lending, Private Banks, Capital Goods, NBFC - Lending, and Consumer sectors. On a QoQ and YoY basis, however, FIIs raised their stakes in PSU Banks, Telecom, Oil & Gas, Chemicals, NBFC - Lending, Insurance, and Metals. On a YoY basis, FIIs reduced their holdings in 15 sectors, with the most significant reductions seen in EMS, Consumer Durables, Technology, Infrastructure, Retail, Private Banks, Utilities, Real Estate, and Consumer sectors.

FII-DII ownership ratio remains stable sequentially

* As a proportion of the free float of Nifty-500, FII ownership dipped 160bp YoY (- 10bp QoQ) to 36%. However, DII ownership rose 340bp YoY (+80bp QoQ) to 40.3%.

* The FII-DII ownership ratio in the Nifty-500 remained flat QoQ (-10bp YoY) at 0.9x in Dec’25. Over the last year, the FII-DII ratio has expanded primarily in PSU Banks, Chemicals, Logistics, and Media, while it contracted in 17 out of 24 sectors.

* Within the Nifty-500 companies, FIIs reduced their holdings in 58% of the companies YoY, while DIIs increased their stake in 72%.

* In the Nifty-50, FIIs reduced their holdings in 78% of the companies, while DIIs raised their holdings in 82% of the companies.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412