2 min readFeb 9, 2026 09:13 PM IST
Domestic mutual funds (MFs) have narrowed their shareholding gap with foreign institutional investors (FIIs) in NSE-listed companies to nearly half, from 10.51% at the end of December 2022 to 5.5% by the end of December 2025, fueled by strong inflows from retail investors, according to a report by primedatabase.com.
At its peak, the gap was 17.14% on March 31, 2015 with FIIs’ share at 20.70% and MFs’ share at just 3.56%. “The balance of ownership in Indian equities is tilting inward, reinforcing the market’s growing atmanirbharta (self-reliance), as MFs alone seem set to overtake FIIs in the coming quarters. This trend started with demonetisation in 2016 and accelerated during Covid years,” said Pranav Haldea, managing director, PRIME Database Group.
Retail investors have increasingly poured money in mutual funds schemes in the last few years. Between December 2022 and December 2025, the net assets under management (AUM) in equity oriented schemes has surged 134%. Mutual funds, flush with retail money coming through systematic investment plans (SIPs), invested Rs 1.06 lakh crore during the December 2025 quarter on a net basis. In contrast, net FII outflows stood at Rs 11,765 crore (outflow of
Rs 42,090 crore in secondary market and inflow of Rs 30,325 crore in primary market) during the quarter. Supported by higher inflows from mutual funds, the share of domestic institutional investors’ (DIIs) ownership in local companies hit an all-time high of 18.72% as on December 31, 2025, up from 18.28% as on September 30, 2025. DIIs had already surpassed FIIs in shareholding across domestic companies in the March quarter.
“FIIs have been the largest non-promoter shareholder category in the Indian market with their investment decisions having a huge bearing on the overall direction of the market. This is no longer the case,” Haldea said.
DIIs along with retail investors and high-net-worth individuals (HNIs) have now been playing a strong countervailing role with their combined share reaching an all-time high of 28% as on December 31, 2025, he said.
On a sectoral basis, DIIs raised their allocation most to the financial services sector from 27.46% of their total holding as on September 30, 2025 to 28.34% of their total holding as on December 31, 2025. They cut their allocation most to consumer discretionary from 16.24% to 15.72%, the report showed.
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