Domestic Investors Take Charge: DIIs Surge to All-Time High, May Surpass FIIs Soon

The share of domestic mutual funds (MFs) in NSE-listed companies rose to a fresh all-time high of 8.92 per cent as on March 31, 2024, from 8.81 per cent as on December 31, 2023, according to data from Prime Database. This increase has been recorded on the back of a strong net inflows of Rs 81,539 crore during the March 2024 quarter.

LIC Boosts DII Shareholding in Indian Equities

Life Insurance Corp.of India (LIC), India’s largest institutional investor, too saw its share (across 280 companies where its holding is more than 1 per cent) increasing to 3.75 per cent as on March 31, 2024 from 3.64 per cent as on December 31, 2023. Given that LIC commands a lion’s share of investments in equities by insurance companies (at least 70 per cent share or Rs 14.29 lakh crore), the overall share of Insurance companies went up from 5.37 per cent to 5.40 per cent during the quarter.

DIIs Narrow Gap as FIIs’ Share Falls to 11-Year Low

The share of domestic institutional investors (DIIs), with net inflows of Rs 1,08,434 crore, increased to 16.05 per cent from 15.96 per cent during the December-March FY24 quarter, according to the Prime Database data.

On the other hand, the share of foreign institutional investors (FIIs) declined to an 11-year low of 17.68 per cent as on March 31, 2024, down by 51 bps from 18.19 per cent as on December 31, 2023, resulting in the gap between FII and DII holding narrowing further to an all-time low in this quarter with DII holding now being just 9.23 per cent lower than FII holding.

“The widest gap between FII and DII holding was in quarter ending March 31, 2015, when DII holding was a staggering 49.82 per cent lower than FII holding. The FII to DII ownership ratio also decreased to an all-time low of 1.10 as on March 31, 2024 from an all-time high of 1.99 in quarter ending March 31, 2015,” Prime Database said in a statement.

Shifting Gears: Domestic Funds Favour Energy Stocks, Cool on Tech in Q4

DIIs increased their allocation most to Energy (from 6.70 per cent of their total holding as on December 31, 2023 to 7.77 per cent of their total holding as on March 31, 2024) while they decreased their allocation most to Information Technology (9.25 to 8.41). FIIs increased their allocation most to Consumer Discretionary (15.03 to 16.27) while they decreased their allocation most to Financial Services (30.90 to 28.39).

Pranav Haldea, managing director of PRIME Database Group, said, “Indian markets are moving towards Aatmanirbharta (self reliance) with the share of DIIs set to overtake that of FIIs in the next few quarters. 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.”

He added that markets would tank when FIIs would pull out. This is no longer the case. DIIs along with retail investors have now been playing a strong counter balancing role.

DIIs and PSUs Drive Market Growth Despite Cautious Retail Investors

Meanwhile, the share of the Government (as promoter) increased to a 7-year high of 10.38 per cent as on March 31, 2024 on the back of strong performance of several PSUs. On the other hand, the share of private promoters declined to a 5-year low of 41 per cent as on March 31, 2024. Over the last 18 months alone, it has fallen by 361 basis points from 44.61 per cent on September 30, 2022

Haldea said 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 market has resulted in this.

The share of retail investors (individuals with up to INR 2 lakh shareholding in a company) decreased marginally to 7.50 per cent as on March 31, 2024 from 7.58 percent on December 31, 2023. The share of High Net Worth Individuals (HNIs) (individuals with more than INR 2 lakh shareholding in a company) too decreased slightly to 2 per cent as on March 31, 2024 from 2.06 percent on December 31, 2023. As such, the combined retail and HNI share declined to 9.50 per cent as on March 31, 2024 from 9.64 per cent as on December 31, 2023.

16 Companies See Stake Rise by Promoters, DIIs & FIIs

There were 16 companies in which the trinity of promoters, FIIs and DIIs all increased their stake during the quarter.

These companies are (in descending order by market capitalisation) — Jai Balaji Industries, Welspun Corp., Ramkrishna Forgings, Star Cement, Man Infraconstruction, Share India Securities, Time Technoplast, Yatharth Hospital & Trauma Care Services, Thangamayil Jewellery, Ajmera Realty & Infra India, Panama Petrochem, Bigbloc Construction, AGS Transact Technologies, Trucap Finance, Khadim India and Mold-Tek Technologies.