The gap in net inflows between domestic institutional investors (DIIs) and foreign institutional investors (FIIs) reduced to its lowest level in the December quarter of 2022, finds a study.
The share of domestic institutional investors (DIIs) and high net-worth individuals (HNIs) in the Indian stock market reached another all-time high of 24.44 per cent on December 31, 2022, from 24.25 per cent on September 30, 2022, a primeinfobase.com report said.
Pranav Haldea, managing director, of PRIME Database Group, which manages the portal, said it was the fifth consecutive quarterly increase from 22.37 per cent on September 30, 2021, showcasing the rising dominance of domestic investors.
Lowest Gap between FII and DII Holdings
The net inflows from DIIs stood at Rs 27,134 crore in the December quarter of 2022, while the net inflows from foreign institutional investors (FIIs) were Rs 47,349 crore, up 20.18 per cent or 20 basis points (bps) as on December 31, 2022, from 19.98 per cent as on September 30, 2022.
Haldea highlighted a structural shift regarding foreign and domestic investors in the Indian market, noting that, as on March 31, 2015, the FII share was 23.30 per cent, while the combined DII, retail, and HNI share was 18.47 per cent. But that gap reduced to its lowest level in the December quarter, with DII holdings being just 24.09 per cent lower than FII holdings. On September 30, 2022, it was 24.87 per cent lower than FII holding, the data showed.
The widest gap between FII and DII holdings was in the quarter ended March 31, 2015, when DII holding was 55.45 per cent lower than FII holding. The FII to DII ownership ratio also fell to an all-time low of 1.32 on December 31, 2022, down from 1.33 on September 30, 2022.
It said, since June 2009, the FII share has risen from 16.02 per cent to 20.18 per cent, while the DII share has increased from 11.38 per cent to 15.32 per cent.
Mutual Fund Investments In Companies
The share of domestic mutual funds (MFs) in NSE-listed companies increased for the sixth straight quarter to an all-time high of 8.09 per cent as on December 31, 2022, up from 7.97 per cent as on September 30, 2022.
The spike comes after a five-quarter consecutive decline between March 31, 2020 (7.96 per cent) and June 30, 2021 (7.25 per cent). The share has increased on the back of net inflows of Rs 22,698 crore during the quarter by domestic MFs.
Holding of domestic MFs went up by 5.54 per cent to Rs 22.33 lakh crore as on December 31, 2022, from Rs 21.16 lakh crore on September 30, 2022 (Sensex and Nifty rose by 5.95 and 5.91 per cent, respectively, during this period). In addition, MFs increased their exposure to financial services and industrial sectors while trimming down their exposure to utilities and diversified.
In addition, the share of insurance companies also increased to a five-year high of 5.65 per cent as on December 31, 2022, up from 5.57 per cent as on September 30, 2022.
In rupee value terms, it went up by 5.40 per cent to Rs 15.58 lakh crore as on December 31, 2022, from the previous quarter. LIC continues to command the lion’s share in equity investments among insurance companies, with a 70 per cent share or Rs 10.91 lakh crore.
PRIME Database further said the LIC’s share across 268 companies where its holdings are more than one per cent, increased to 3.95 per cent as on December 31, 2022, from 3.87 per cent as on September 30, 2022. Insurance companies also increased their exposure to energy and FMCG sectors, while trimming down their exposure also to consumer discretionary and diversified.
The overall share of DIIs increased to a record 15.32 per cent as on December 31, 2022, from 15.01 per cent as on September 30, 2022. In rupee value terms, DII holding went up to Rs 42.28 lakh crore as on December 31, 2022, up 6.07 per cent over the last quarter.
Retail Investors’ Share In Listed Companies
The share of retail investors (those up to Rs 2 lakh shareholding in a company) in NSE-listed companies marginally declined to 7.23 per cent as on December 31, 2022, from 7.34 as on September 30, 2022. In rupee value terms, retail holding increased to Rs 19.94 lakh crore from Rs 19.48 lakh crore on September 30, 2022, up 2.35 per cent, the primeinfobase study showed.
In addition, the share of high net worth individuals (HNIs) (those with over Rs 2 lakh shareholding in a company) in NSE-listed companies also fell to 1.89 per cent as on December 31, 2022, from 1.90 percent on September 30, 2022. The combined retail and HNI share stood at 9.12 per cent as on December 31, 2022, down from 9.24 per cent as on September 30, 2022.
The collective share of retail, HNI, and domestic mutual funds stayed the same at 17.21 per cent as on December 31, 2022, compared to the figure as on September 30, 2022.
On the other hand, the FII holding in NSE-listed companies stood at Rs 55.70 lakh crore as on December 31, 2022, an increase of 4.98 per cent from Rs 53.06 lakh crore as on September 30, 2022. FIIs pulled out Rs 3,162 crore from the consumer durables, oil and & gas, and consumable fuels sectors during the quarter while investing Rs 19,391 crore in financial services and FMCG.