Mumbai: Domestic institutions’ ownership in Indian firms rose to a new all-time high of 18.72% in the December quarter, further stretching their lead over foreign investors after overtaking them for the first time in January-March 2025.

The stake of overseas investors in Indian firms, meanwhile, declined to 16.6% – the lowest in 14 years, according to a study based on Prime Database data.

The “sticky inflow” through systematic investment plans and from wealthy individuals and retail investors, along with pension funds increasing exposure to equities, tilted the ownership structure to local institutions, said Rupen Rajguru, head of Equity Investment and Strategy at Julius Baer India.

Steady SIP Flows
Mutual fund (MF) holding increased to 11.1%, the highest on record, in the October-December period, the tenth consecutive quarter when it rose.

The gap between MF and foreign institutional investor (FII) holdings shrank to 5.5 percentage points (550 basis points) from 10.5 percentage points as of December 2022. “The balance of ownership in Indian equities is gradually tilting inward as MFs alone seem set to overtake FIIs,” said Prime Database managing director Pranav Haldea.
Mutual funds poured in Rs 1.06 lakh crore in the December quarter on a net basis, while global investors liquidated Rs 11,765 crore combined in the primary and secondary markets.
While flows from MFs have been the highest among domestic institutions, insurance companies with a net buying of Rs 21,490 crore, alternative investment funds (Rs 367 crore) and portfolio management services (Rs 1,205 crore) also played their part, said Haldea.
Despite zero returns in the last 16 months, SIP flows from mutual funds remained steady and strong, Rajguru said.

Foreign investors sold stocks worth over Rs 42,000 crore between October and December in 2025, after dumping Rs 1.02 lakh crore between July and September.

Analysts said uncertainty of the US-India trade deal, which also weakened the rupee, had soured foreign investor sentiment on India.

Asian stocks rose at the open as investors took cues from a Wall Street rally on Friday, following a volatile week driven by concerns over valuations in technology stocks.

The Nikkei 225 Index surged as much as 5.7% to a record as a historic election victory by Prime Minister Sanae Takaichi buoyed markets. The Kospi Index — a poster child for artificial intelligence investments — jumped over 4%. US equity-index futures advanced after the underlying gauges rose about 2% on Friday amid dip buying, while Bitcoin also recovered from its tumble. Yields on 10-year Treasuries rose almost two basis points on Monday.

Gold and silver opened the week higher, even though the precious metals are still way off their record highs. Brent crude dipped around 1% as tensions eased in the Middle East.

The Dow Jones Industrial Average climbed to a record 50,000 on Friday, reflecting a shift toward cyclical stocks as investors pared exposure to technology. Monday’s rally in stocks sets up a critical week ahead, with markets gauging whether demand can broaden as scrutiny intensifies around valuations and the scale of investment tied to AI.

Traders were taking advantage of the selloff earlier last week, picking up some cheap stocks to extend the rotational trade into cyclicals and away from tech, said Tony Sycamore, an analyst at IG in Sydney. The Wall Street tailwind and Japan election results mean “at least for the very, very short term, we’re going to see a good risk-on session across Asian equity markets,” he added.

Meanwhile, the yen fluctuated Monday as Takaichi secured a historic election triumph. The result cleared the way for more fiscal stimulus under Takaichi, adding pressure on Japanese bonds while potentially lifting stocks. Yields on the nation’s 10-year government bond rose five basis points on Monday.
Japan’s election outcome reinforced expectations for looser fiscal policy and sustained pressure on the yen, with investors bracing for so-called Takaichi trades to dominate markets on Monday.