Who Owns the India Inc.?

Indian listed stocks are owned by various key players including Domestic Mutual Funds (DMF), Foreign Institutional Investors (FII), Promoters amongst others. The composition of ownership by these players and the change in the same indicate many things.

1. Decline in Promoters share further in December quarter:

Promoter ownership in companies listed on the NSE fell by 0.67% quarter-on-quarter, reaching 50.4% in the December 2024 quarter, the lowest level in five quarters. This is the second consecutive decline and adds up to nearly a 1% decrease over the first three quarters of the fiscal year. This was mainly lead by Government promoter % dropping by 0.7% QoQ.

However, given the current valuations (as of February 2025), there are signs of promoter buying, and it is expected that promoter ownership will increase soon.

After a slight increase in the September quarter, the share of Foreign Portfolio Investors (FPI) dropped by 0.30% quarter-on-quarter in the December quarter, reaching a 13-year low of 17.4%. This marks a total decline of 1.7% over the past six quarters. The decrease was mainly due to large foreign capital outflows, with FPIs pulling out a net amount of $11.9 billion in the December quarter, the highest in the last 10 quarters. This was followed by an additional $12.1 billion in outflows as of February 17th, 2024. However, the drop in ownership was partly balanced by the strong performance of Financials, a sector where FPIs have significant investments (~31% of their total investments in NSE-listed companies). For example, the Nifty Bank Index fell by 4% in the December quarter, which was less than the drops seen in the Nifty 50 (-8.4%) and Nifty Next 50 Index (-11.8%) during the same period. Excluding Financials, the FPI share in NSE-listed companies fell even more, by 0.46% quarter-on-quarter, reaching a 50-quarter low of 15.3%. In terms of value, FPI holdings in NSE-listed companies dropped by 8.3% quarter-on-quarter to Rs 75.8 lakh crore, marking the first decline in the last seven quarters, though it is still up by 11.1% for the fiscal year so far.

• DMF shareholding surged to fresh record high levels

Continuing the steady rise seen in the past five quarters, the share of Domestic Mutual Funds (DMFs) in the listed universe increased by 0.48% quarter-on-quarter, reaching a new all-time high of 10.0% in the December quarter. In terms of value, DMFs’ holdings dropped slightly by 2% quarter-on-quarter to Rs 43.4 lakh crore, which is much smaller than the overall market cap decline, showing that DMFs continued to make fresh investments during the quarter. DMFs invested a net amount of Rs 1.86 lakh crore into Indian stocks in the third quarter of this fiscal year, bringing total net inflows to Rs 4.86 lakh crore for the first 10 months (April to January 2025), which is far higher than any previous fiscal year’s net investments. This increase is partly due to ongoing indirect investments by individuals through the SIP (Systematic Investment Plan) route, which has seen steady growth in recent years. SIP inflows grew by 8.0% quarter-on-quarter, reaching an average of Rs 25,701 crore per month in the December quarter. Of the total DMF share of 10%, passive funds made up 1.8%, while active funds held the remaining 8.1%, which is a 0.44% increase from the previous quarter.

In January 2025, the monthly SIP data was Rs 26,400 crore, slightly down from December 2024. This indicates strong confidence among individual investors in the growing Indian economy.

• Individual investors’ holding inched up to over 17-year high levels

After staying relatively steady over the past five quarters, individual investors’ share increased by 0.20% quarter-on-quarter, reaching a 70-quarter high of 9.8% in the December quarter. In value terms, individual holdings stood at Rs 42.8 lakh crore, a 4.8% drop from the previous quarter, but still up from Rs 9.4 lakh crore at the end of March 2020. This reflects an annual growth of 37.5%. A large part of this growth is due to continued investments by individuals, even during market corrections. In the December quarter, individuals invested a net amount of Rs 56,124 crore in the secondary markets (NSE), bringing their total net investments for the fiscal year so far (as of January 31st, 2025) to Rs 1.1 lakh crore. Adding indirect ownership through mutual funds (which make up 8.0%), individuals’ total share in the equity markets as non-promoter shareholders reached 18.2%, surpassing FPIs by almost a percentage point for the first time since 2006. This gap was as wide as 11 percentage points back in March 2014, showing the growing importance of individual investors in the Indian equity markets.

Overall, the composition of the key players owning the India Inc seems to be shifting towards the DMF, powered by a significant increase in SIP inflows. The government-led promoter % declined as a part of the privatisation of the government institutions.