Foreign Portfolio Investors’ (FPIs) ownership in Indian equities continued its downtrend in the June quarter, with their share in NSE-listed companies slipping 16 basis points (bps) sequentially to 17.3% — the lowest level in nearly 13.5 years, according to the August edition of NSE Market Pulse report. The decline reflects persistent volatility in foreign capital flows since March 2023, barring a couple of marginal upticks.
FPIs Prefer Large-Cap Exposure
Despite the overall decline, FPIs showed a clear preference for large-cap names. Their ownership in Nifty 50 companies rose 21 bps quarter-on-quarter (QoQ) to a six-quarter high of 24.5%. Holdings in the Nifty 500 stayed largely steady at 18.5%, suggesting selective inflows into top-tier stocks amid global macroeconomic and market uncertainties.
Sectorally, FPIs reinforced their overweight stance on Financials, turned incrementally positive on Communication Services, and maintained caution on consumption and commodity-linked sectors such as Consumer Staples, Energy, and Materials. Their view on Industrials remained negative, while they stayed neutral on Consumer Discretionary, IT, Healthcare, Utilities, and Real Estate, according to the report.
Promoter Shareholding Continues to Fall
Promoter shareholding extended its downward trajectory for the fourth straight quarter. In the NSE-listed and Nifty 500 universe, promoter ownership declined by 13 bps and 27 bps to 50.0% and 49.3% respectively, hitting multi-quarter lows.
In the Nifty 50, the drop was sharper — down 32 bps to a near 23-year low of 40.2% — primarily due to reduced stakes of private Indian and government promoters.
Government Stake Shows Mixed Trend
After surging in FY23–24 following the LIC listing and PSU rally, government ownership showed divergent trends in Q1FY26. In NSE-listed and Nifty 500 companies, government share rose modestly to 10.1% and 10.9%, supported by a 15% rally in the PSU Bank Index. However, in the Nifty 50, government shareholding slipped 14 bps to a six-quarter low of 6.7%, marking its third straight decline.
Domestic Mutual Funds Hit Record Highs
In contrast to FPIs, Domestic Mutual Funds (DMFs) continued to gain ground. Net equity inflows of ₹1.2 lakh crore — the 17th consecutive quarter of positive flows — pushed domestic mutual funds’ ownership to fresh all-time highs of 13% in the Nifty 50, 11% in the Nifty 500, and 10.6% across NSE-listed companies.
Retail investors remained a key pillar, with average monthly SIP inflows climbing to ₹26,863 crore in Q1 FY26, up 2.9% QoQ and nearly 29% YoY. Actively managed funds drove the gains, with their share expanding to 8.6%, while passive funds remained steady at 1.9%.
DMFs also realigned portfolios closer to benchmarks — trimming overweight positions in large-cap Financials, turning positive on Materials and smaller Consumer Discretionary names, while reducing exposure to Energy amid weak crude prices and regulatory uncertainty.
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