Motilal Oswal Explains Why DIIs Increased Their Stakes in 82% of Nifty Stocks Over the Past Year

As of March 2026, India’s domestic institutional investors (DIIs) have significantly increased their presence in the stock market, particularly within Nifty-linked companies, where their ownership has reached an unprecedented 25.4%. This shift comes at a time when foreign institutional investors (FIIs) are retreating from the market, with their holdings declining to a multi-year low of 22.2%. Such contrasting trends indicate a notable structural transformation in market dynamics, with DIIs now commanding a greater proportion of ownership than their foreign counterparts, who have demonstrated a growing aversion to risk amid geopolitical uncertainties.

The broader Nifty 500 universe reflects a similar trend, as DII ownership has seen a consistent rise over the past eight quarters, culminating in an all-time high of 20.9%. Meanwhile, FII ownership has dwindled to 17.1%, marking the lowest point in a decade. This pronounced compression of the FII-to-DII ownership ratio—from 1.7x in 2016 to 0.8x—suggests a substantial reliance on domestic capital as a stabilizing force in the market. The outflow of $15.8 billion by foreign investors during the March quarter, primarily attributed to geopolitical tensions, contrasts sharply with the $27.2 billion capital injection from domestic institutions, underscoring a pivotal role for DIIs in cushioning the market against global shocks.

Notably, DIIs have increased their stakes in 82% of Nifty constituents while FIIs have reduced their holdings in 78% of companies, indicating a clear trend of domestic accumulation, particularly in major firms like Infosys, Kotak Mahindra Bank, and Tech Mahindra. Sectorally, DIIs have shown strong interest across various sectors, with significant increases in technology and private bank ownership. This emerging strength of domestic institutions suggests a decreasing vulnerability of Indian equities to global risk-off cycles, positioning them as a more resilient investment opportunity in an increasingly volatile global landscape.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)