DII holding hits record 21% in Nifty 500 cos; will their dominance continue?

In contrast, foreign institutional investor (FII) holding declined to a new low of 17 per cent in June 2026, the MOFSL note said.

Domestic institutional investors (DII's) continued to tighten their grip on the markets for the ninth consecutive quarter with their holding in Nifty 500 companies reaching a record 21 per cent in the June 2026 quarter, according to a note by Motilal Oswal Financial Services (MOFSL). 

 

In contrast, foreign institutional investor (FII) holding declined to a new low of 17 per cent over the same period, the note said. 

 

The brokerage has classified the Nifty-500 universe among private, public sector undertakings (PSU), and multi-national companies (MNC) companies.

 

“DIIs invested $22.8 billion in Indian equities in Q2-CY26, backed by the unwavering systematic investment plan (SIP) run rate. Conversely, FII flows have been volatile; although they turned positive in the second half of June 2026 at $1.3 billion versus net outflows of $4.3 billion in the first half of June 2026 – taking the Q2-CY26 FII outflows to $13.2 billion,” the MOFSL note said.

 

 

DII holding in Nifty 500; Source MOFSL report

 

DIIs, according to Anirudh Garg, Partner and Fund Manager, INVasset PMS, have continued to repose faith in the Indian markets even during stressful times, having bought in every single month, ₹1,42,960 crore in March at the peak of the stress, ₹51,064 crore in April, ₹82,669 crore in May, ₹85,800 crore in June, and ₹32,839 crore in July. 

 

“This is not opportunistic capital timing dips; it is mechanical monthly deployment from record SIP flows, insurance premiums, and EPFO and NPS allocations that arrive whether the market is up or down. On sustainability, the DII engine is structural rather than sentimental, because household financialisation is perhaps halfway through a multi-decade migration and monthly SIP flows have grown through every correction of the past five years,” Garg said.

 

Notably, DII holdings in private companies, according to the MOFSL note, rose to an all-time high of 21.8 per cent, up 200 basis points (bps) year-on-year (YoY) in the June 2026 quarter. Their holdings in PSU companies were at 17.3 per cent (up 140bp YoY) during this period. 

 

FIIs, on the other hand, pared their stake in private companies by 260bp YoY to 19.4 per cent in June 2026, MOFSL said. Further, their stake in PSUs rose 70bp YoY to 9.7 per cent in June 2026.

 

In terms of sectors, DIIs, on a YoY basis, increased their holdings in Private Banks, Telecom, Real Estate, Technology, Healthcare, Insurance, Automobiles, PSU Banks, NBFC-Lending, Retail, and Capital Goods; EMS, Media, Metals, Consumer Durables, and Consumer witnessed a reduction.

 

On the other hand, FIIs raised their stakes in Metals, PSU Banks, NBFC-lending, Capital Goods, and Logistics sectors on YoY basis. Most significant reductions were visible in Private Banks, EMS, NBFC-Non Lending, Technology, Real Estate, Retail, Automobiles, Healthcare, Consumer, Oil & Gas, Insurance, Cement, and Utilities. 

 

The road ahead

 

Going ahead, analysts expect DIIs to remain a dominant force in the Indian equity markets regardless of market direction.

 

“The monthly quantum will vary with how much foreign selling there is to absorb. The architecture is now settled: domestic flows provide the floor, foreign flows decide the pace,” Garg said.

 

Though the worst of FII selling, said Jyotivardhan Jaipuria, founder & managing director at Valentis Advisors, could be over, foreign investors are not in a hurry to return to Indian shores with animal spirits just yet.

 

“FIIs are unlikely to increase their underweight position on India in any meaningful way. Bond yields, rupee-dollar equation, corporate earnings back home and how the artificial intelligence trade plays out will determine how the flows pan out,” he said.