Mutual fund ownership in NSE-listed companies hits record high

Mutual funds' stake in national Stock Exchange-listed companies surged to all-time high level of 8.92 per cent in the quarter ending March 2024, driven by substantial net inflows of Rs 81,539 crore during the period, according to primeinfobase.com, an initiative of Prime Database Group. This marks an increase from 8.81 per cent in the preceding quarter ended December 2023.

LIC, the largest domestic institutional investor, witnessed its share rise to 3.75 per cent across 280 companies owning more than 1 per cent each, up from 3.64 per cent in December 2023.

The collective share of Domestic Institutional Investors (DIIs), comprising domestic mutual funds, insurance companies, banks, financial institutions, pension funds, and NBFCs, also saw an uptick to 16.05 per cent in the quarter under review, compared to 15.96 per cent in the previous quarter, driven by a significant inflow of Rs 1.08 lakh crore.

Conversely, foreign portfolio investors (FPIs) saw their share decline to an 11-year low of 17.68 per cent as of March 2024, down from 18.19 per cent in December 2023, resulting in the gap between FPI and DII holding narrowing to an all-time low, with DII holding now just 9.23 per cent lower than FPI holding.

The widest gap between FPI and DII holding was observed in the quarter ended March 31, 2015, with DII holding at 49.82 per cent.

"Indian markets are moving towards self-reliance with the share of DIIs set to overtake that of FPIs in the next few quarters," remarked Pranav Haldea, Managing Director of PRIME Database Group.

This analysis is based on shareholding patterns filed by 1,956 out of the total 1,989 companies listed on NSE for the quarter ended March 2024. As of April 22, 33 companies were yet to file their shareholding data.

Meanwhile, government ownership as a promoter surged to a 7-year high of 10.38 per cent in the quarter ending March 2024, driven by the strong performance of several PSUs. Conversely, the share of private promoters declined to a five-year low of 41 per cent as of March 31, 2024.

Stake sales by promoters, taking advantage of bullish markets, relatively lower promoter holding in some IPO companies, and overall institutionalization of the market have contributed to this trend, Haldea noted. Additionally, retail investors' holding marginally decreased to 7.50 per cent as of March 31, 2024, from 7.58 per cent in the preceding quarter.

(With PTI inputs)