Desi Money Dominates: Domestic Investors Trump Foreign Inflows in Indian Markets Over a Decade

In a significant shift in the Indian equity landscape, domestic investors have increasingly played a crucial role in driving market growth over the past decade. A recent report by Motilal Oswal, cited by ANI, highlights a stark contrast in the contributions made by Domestic Institutional Investors (DIIs) and Foreign Institutional Investors (FIIs).

As per the findings, DIIs have pumped in a whopping $195 billion into Indian equities between FY15 and FY25. This is more than 3.7 times the $53 billion invested by FIIs over the same period. The report notes that while the growth of domestic capital in the markets has been gradual, it gained strong momentum post-FY21.

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Despite facing significant challenges such as the global COVID-19 pandemic, rising international interest rates, and escalating stock valuations in India, domestic investors have remained steadfast, continuing to increase their presence in the market, according to the report by Motilal Oswal. This consistent inflow of capital highlights the growing confidence of Indian investors in the long-term prospects of the Indian economy.

The report also provides insights into how domestic and foreign investors have altered their sectoral preferences within the Nifty-500 index.

FIIs continue to hold the largest stakes in Private Banks, at 47.5%, followed by Telecom (22.5%), Real Estate (21%), Non-Lending NBFCs (20.5%), Technology (19.5%), Healthcare (18.7%), and Consumer goods (18.6%). Furthermore, FIIs increased their investment in sectors like Non-Lending NBFCs, Telecom, and Real Estate by several basis points over the past year.

Meanwhile, DIIs have had the highest stake in sectors such as Private Banks (33.1%), Consumer goods (23.9%), Oil & Gas (21.3%), Consumer Durables (20.9%), and Metals (20.7%). Over the year, DIIs raised their stakes in Private Banks, Consumer Durables, Consumer goods, and PSU Banks, reflecting their growing confidence in these sectors.

In terms of sectoral preferences, DIIs were notably overweight on sectors like Consumer goods, Oil & Gas, and Metals, while they remained underweight in sectors like Private Banks, Non-Lending NBFCs, and Real Estate.