In the October-December quarter of the calendar year 2024, equity market saw shift in ownership landscape, with promoters, government and foreign portfolio investors (FPIs) trimming their stake in the NSE listed companies, while domestic mutual funds and individual investors increased their exposure in listed entities. Individual ownership, both directly and through mutual funds, hit a record-high 18.2% in Q4 CY24, surpassing FPI share for the first time since 2006 amid sustained fund outflows by foreign investors in recent time amid valuation concerns coupled with weak earnings of India Inc., reveals a report released by the NSE.

Over the last five years, the household wealth in Indian equities increased by over ₹46 lakh crore, and ₹30 lakh crore in the last two years, thanks to strong performance of domestic stock market, coupled with rising participation, as per the report issued by the NSE.

Here’s detailed analysis of changing trend of ownership in NSE companies:

FPIs ownership decline to 13-year lows

After inching up marginally in the September quarter, FPIs ownership in the NSE listed, and Nifty 50 companies fell by 30 basis points (bps) and 15bps QoQ to a 13-year and 12-year low of 17.4% and 24.3%, respectively. On the other hand, their stake in Nifty 500 Index remained steady at 18.8%, indicating higher selling in largecap stocks. This decline came on the back of significant outflows by FPIs in the December quarter, amounting to $11.9 billion. In value terms, FPI holding in NSE listed companies dipped by 8.3% QoQ to ₹75.8 lakh crore, marking the first QoQ drop in the last seven quarters.

FPIs strengthened their outsized bet on financials, remained positive on communication services, turned incrementally more cautious on consumption and commodity-oriented sectors, namely energy, materials, and consumer staples and maintained a perennially negative stance on industrials. Among other sectors, FPIs retained a neutral stance on consumer discretionary, healthcare, information technology, utilities and real estate, showed the NSE data.

Promoter share slips to 22-year low of 41.4%. in Q3 FY25

Total promoter ownership in NSE-listed and Nifty 500 companies declined for the second consecutive quarter by 67bps and 92bps QoQ to 50.4% and 49.6%, respectively. The decline was broad-based across all promoter categories, with the most significant reduction seen in the government holding. Promoter share in the Nifty 50 Index fell by a slightly higher 96bps QoQ to near 22-year low of 41.4%.

Govt stake fell for the second quarter in a row

The government ownership (promoter and non-promoter) in the NSE listed universe, Nifty 500 and Nifty 50 companies fell by 53bps, 32bps and 26bps QoQ to 10%, 10.9% and 7.1%, respectively. A part of this decline was led by a significant underperformance of public sector banks relative to the broader market during the quarter. For instance, the Nifty CPSE Index posted a loss of 16.1% in the December quarter compared to the 8.4% and 7.7% loss generated by the Nifty 50 and Nifty 500 Index, respectively.

MFs’ shares hit fresh all-time high level

Aided by sustained SIP inflows, domestic mutual funds’ (DMFs) share rose further to a fresh all-time high of 12.2%, 10.5% and 10% in Nifty 50, Nifty 500 and NSE listed companies, respectively. DMFs injected a record net amount of ₹1.5 lakh crore in the December quarter, and further ₹71k crore in the first one-and-a half month of this quarter, taking the total net inflows to ₹4.2 lakh crore in the fiscal thus far (As of February 14, 2025). Out of total share held by DMFs, passive funds’4 share remained steady at 1.8%, while that of active funds expanded by 44bps QoQ to a record-high of 8.1%.

The December quarter gone by saw DMFs realigning their portfolio closer to the Index. Contrary to FPIs, DMFs trimmed their overweight stance on large-cap financials, tapered their negative bias on energy and materials, and turned incrementally positive on consumer discretionary, while retaining an underweight stance on consumer staples. DMFs also strengthened their negative view on information technology, reflecting rising global uncertainty.

Individual investors’ shares rise to a 70-quarter high of 9.8%

Individual investors’ direct non-promoter ownership inched up by 20bps QoQ in the NSE listed companies to a 70-quarter high of 9.8%, corroborating with record investments of around ₹56,000 crore in the December quarter. Their holding in the Nifty 500 universe rose by a modest 12bps QoQ to 8.8%, while that in the Nifty 50 Index remained steady at 8.0%, reflecting the impact of relative outperformance of mid and small-cap companies and incrementally higher investments in such companies.

Individuals as direct and indirect (via mutual funds) investors today own a record-high of 18.2% of the total market cap (₹79.6 lakh crore; 10-year CAGR: +21.3%), outpacing the share of FPIs for the first time since 2006. This gap was as high as 11pp in March 2014, indicating the growing role and significance of individual investors in the Indian equity markets.

Declining portfolio exposure to large-cap cos

The share of Nifty 50 companies in total institutional holding declined further to the lowest level of 58.7% in Q4 CY24. This is partly attributed to sustained inflows in mid- and small-cap funds during the quarter, coupled with relatively smaller losses generated by such companies. Individuals also saw the share of these companies in their overall portfolio falling to over 22-year low of 35% in the December quarter, translating into a total decline of 12.1pp in the last seven quarters. This is also reflected in the falling share of institutional and individuals’ investments in the top decile companies by market capitalisation.

The portfolio allocation of FPIs to the top decile companies (200 companies) fell to a 14-year low of 88.1%, marking the fourth consecutive decline, while that of DMFs rose marginally to 80.4%. Further, individual investors now have 63.2% of their portfolio invested in the top decile companies, the lowest since 2001.