The shift pushed DII ownership of the Nifty 50 to an all-time high of 25.9%, up 2.1 percentage points from a year earlier, according to a Motilal Oswal Financial Services report. FII ownership dropped 2.4 percentage points to 22.7%, leaving domestic institutions with a 3.2-point lead.
The reversal has been particularly pronounced in some of the index’s largest new-age, healthcare and financial stocks.
Max Healthcare Institute witnessed the biggest ownership shift. FII holdings declined 13 percentage points to 41.8%, while DII ownership rose 12.5 percentage points to 30%.
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Eternal followed closely, with foreign ownership falling 12.3 percentage points to 32%. Domestic institutions raised their stake by 10.4 points to 41%, giving them a significantly larger holding than FIIs.
InterGlobe Aviation experienced a similar change. FII ownership declined seven percentage points to 20.3%, while the DII stake rose 7.8 points to 31.9%.The ownership transfer extended deep into India’s private banking sector. FIIs cut their stakes in each of the four private lenders in the Nifty 50, while DIIs increased holdings across the board.
Foreign ownership of ICICI Bank fell 6.9 percentage points to 49.8%, while the DII stake climbed 6.6 points to 42.5%. In HDFC Bank, FII ownership declined 6.1 points to 49.6%, as the DII holding increased 5.2 points to 36.3%.
Kotak Mahindra Bank saw its FII stake decline 5.5 percentage points to 25.2%, while domestic institutions increased their holding by 6.5 percentage points to 37.7%. Axis Bank’s FII ownership fell 2.7 percentage points to 43%, compared with a 2.9 percentage-point rise in DII stake to 42.7%.
Healthcare stocks emerged as another key destination for domestic capital. Apart from Max Healthcare, DIIs increased their holdings in Cipla by 5.3 percentage points, Dr. Reddy’s Laboratories by five percentage points and Sun Pharmaceutical Industries by 2.7 percentage points. FIIs reduced their stakes in the three stocks by five percentage points, 4.4 percentage points and 2.7 percentage points, respectively.
HDFC Life Insurance also witnessed a significant ownership shift, with FII ownership declining 5.5 percentage points and DII holdings rising 5.6 percentage points.
Technology stocks displayed a similar broad pattern. FIIs reduced their stake in Infosys by 6.4 percentage points, while DIIs increased theirs by 4.2 percentage points. Foreign ownership also declined by 4.6 percentage points in Tech Mahindra, 3.5 percentage points in HCL Technologies and 2.4 percentage points in Tata Consultancy Services.
Domestic institutions raised their stakes in Tech Mahindra by 4.8 points, HCL Technologies by 2.6 points and TCS by 1.5 points. Wipro was the notable exception: its FII holding increased marginally by 0.2 percentage point, while the DII stake fell 2.6 points.
The selling has pushed technology’s share of overall FII allocations in the Nifty 500 to an all-time low of 5.6%, down 3.7 percentage points from a year earlier.
Still, foreign and domestic institutions were not always on opposite sides. FIIs raised stakes in Hindalco Industries by 4.2 percentage points, while DIIs reduced their holding by 5.1 points. Foreign investors also increased ownership in Coal India and Adani Ports by 2.2 points and 2.1 points, respectively, as domestic holdings declined.
At the sectoral level, FIIs reduced holdings in 19 of the 24 Nifty 500 sectors over the past year. Their biggest cuts were in private banks, electronics manufacturing services, non-lending NBFCs, technology, media, real estate and retail.
FIIs raised stakes in only five sectors: logistics, metals, PSU banks, lending NBFCs and capital goods. Logistics recorded the biggest increase at 2.4 percentage points, followed by metals at 1.9 percentage points and PSU banks at 1.7 percentage points.
DIIs, by contrast, increased ownership in 19 sectors. Their biggest additions were in private banks, telecom, real estate, technology and healthcare.
The ownership shift extends beyond the Nifty 50. DII holdings in the Nifty 500 rose for the ninth consecutive quarter to a record 21% in June, while FII ownership slipped to a new low of 17%.
Foreign investors have withdrawn a cumulative $58 billion since the Indian market peaked in September 2024, according to the report. Domestic institutions invested a record $166 billion over the same 22-month period, supported by average monthly systematic investment plan inflows of about $3 billion.
The change is even more striking over a longer horizon. FIIs owned 24.4% of the Nifty50 in June 2016, compared with just 13.2% for domestic institutions. A decade later, DIIs have overtaken them and now hold more than a quarter of India’s benchmark index.