The share of domestic mutual funds (MFs) in NSE-listed stocks touched a fresh all-time high of 9.17% as of June 30, 2024, from 8.93% as of March 31, 2024, as per the latest exchange data. This was driven by strong net inflows of ₹1.09 lakh crore during the quarter, as per primeinfobase.com, which tracks primary markets.
The share of retail investors also reached an all-time high of 7.64% in the April-June quarter from 7.52% on March 31, 2024, while the share of HNI investors decreased slightly to 1.98% as on June 30, 2024 from 2% in the March quarter of 2024. As a result, the combined retail and HNI shares increased to 9.62% from 9.52% as of March 31, 2024.
The data showed that Life Insurance Corporation of India (LIC), India’s largest institutional investor, on the other hand, saw its share (across 282 companies where its holding is more than 1%) decreasing to an all-time low of 3.64% as on June 30, 2024, from 3.75% as on March 31, 2024.
“This was despite net buying by LIC of ₹12,400 crore during the quarter,” says Pranav Haldea, Managing Director, PRIME Database Group. Given that LIC commands a lion’s share of investments in equities by insurance companies (at least 70% share or ₹15.72 lakh crore), the overall share of insurance companies also went down from 5.40% to 5.23% during the quarter.
Overall, the share of domestic institutional investors (DIIs) as a whole, increased to 16.23% from 16.07% during the June quarter.
On the other hand, the market share of foreign institutional investors (FIIs) declined to a 12-year low of 17.38% as of June 30, 2024, down by 34 bps from 17.72% as of March 31, 2024, as they pulled out ₹7,693 crore from the market during the period under review.
As a result, the gap between FII and DII holding narrowed to its lowest-ever level, with DII holding now being just 6.60% lower than FII holding. The widest gap between FII and DII holding was in the quarter ending March 31, 2015, when DII holding was a staggering 49.82% lower than FII holding. The FII to DII ownership ratio also decreased to an all-time low of 1.07 as of June 30, 2024, from an all-time high of 1.99 in the quarter ending March 31, 2015.
“Indian markets are rapidly moving towards atmanirbharta (self-reliance) with the share of DIIs set to overtake that of FIIs in the next few quarters,” says Haldea.
For years, 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, adds Haldea. “DIIs along with retail (individuals with up to ₹2 lakh shareholding in a company) & High Net Worth Individuals (HNIs) (individuals with more than ₹2 lakh shareholding in a company) investors have now been playing a strong counterbalancing role with their share reaching an all-time high of 25.85% as on June 30, 2024.”
The data also highlighted that DIIs increased their allocation most to commodities (from 7.91% of their total holding as of March 31, 2024, to 8.73% of their total holding as of June 30, 2024) while they decreased their allocation most to Energy (11.53% to 10.64%). FIIs increased their allocation most to consumer discretionary (16.23% to 17.13%) while they decreased their allocation most to IT (8.93% to 8.09%).
As per the data, the share of the government (as promoter) increased to a 7-year high of 10.64% as of June 30, 2024, on the back of the strong performance of several PSUs. On the other hand, the share of private promoters declined to a 5-year low of 40.88% during the April-June quarter of the year. Over the last 10 quarters alone, it has fallen by 428 basis points from 45.16% on December 31, 2021.
“Stake sales by promoters to take advantage of bullish markets, relatively lower promoter holding in some of the IPO companies and also overall institutionalisation of the market has resulted in this,” explains Haldea.
There were 21 companies in which the trinity of promoters, FIIs and DIIs all increased their stake during the quarter. The list includes ICICI Lombard General Insurance Co., Deepak Nitrite, Jindal Saw, KSB, Nava, Saregama, LT Foods, Redtape, Garware Technical Fibres, Epigral, Tide Water Oil Co., Greenply Industries, Shalby, V2 Retail, Pennar Industries, Snowman Logistics, MSP Steel & Power, Royal Orchid Hotels, Sarla Performance Fibers, Smartlink Holdings and Usha Martin Education & Solutions (in descending order by market capitalisation).
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