Record DII inflows offset $58 billion FII selloff: Top sectors revealed

Domestic institutional investors (DIIs) have tightened their grip on the Indian stock market, with their ownership in Nifty 500 companies climbing to a record high even as foreign institutional investors (FIIs) continue to trim exposure. A latest ownership analysis by MOFSL shows that record domestic inflows have more than offset sustained foreign selling, highlighting a structural shift in India's equity market where local investors are playing an increasingly dominant role.

Record DII Inflows Counter Persistent FII Selling

Foreign investors have remained net sellers of Indian equities amid geopolitical uncertainties, moderating corporate earnings growth and elevated valuations.

Over the past 22 months since the market peak in September 2024, FIIs have pulled out nearly $58 billion from Indian equities. However, this selling has been comfortably absorbed by domestic investors, with DIIs investing a record $166 billion during the same period.

Steady retail participation has further strengthened the market's resilience, with systematic investment plan (SIP) inflows averaging around $3 billion every month.

DII Ownership Reaches an All-Time High

The ownership pattern of Nifty 500 companies underscores the growing influence of domestic institutions.

As of June 2026:

* DII ownership rose to a record 21%, marking the ninth consecutive quarter of increases.
* FII ownership slipped to 17%, its lowest level in recent years.
* Promoter holdings edged higher to 49.5%.
* Retail investor ownership stood at 12.6%.

The data suggest that the balance of power in Indian equities continues to shift toward domestic investors.

Banking, Telecom Among Top Bets for Domestic Funds

Domestic institutions increased their holdings in 19 of the 24 Nifty 500 sectors over the past year.

The biggest buying was seen in:

* Private Banks
* Telecom
* Real Estate
* Information Technology
* Healthcare
* Insurance
* Automobiles
* PSU Banks
* NBFCs
* Capital Goods
* Retail

On a sequential basis, DIIs were particularly aggressive in Telecom, Retail, Private Banks, Healthcare and Automobile stocks.

FIIs Turn Selective Despite Overall Outflows

While overall foreign flows remained negative, FIIs selectively increased their exposure to a few sectors.

Their biggest additions were seen in:

* Metals
* PSU Banks
* NBFC-Lending
* Capital Goods
* Logistics

However, FIIs continued reducing stakes in several key sectors, including Private Banks, Technology, Real Estate, Retail, Automobiles, Healthcare, Consumer, Insurance, Oil & Gas, Cement and Utilities.

Domestic Funds Raise Stakes Across Large-, Mid- and Small-Caps

The buying trend wasn't limited to blue-chip stocks. DIIs increased ownership across every market-cap category:

Large-caps: 22.3%
Mid-caps: 19.1%
Small-caps: 17.2%

In contrast, FIIs reduced their holdings across large-, mid- and small-cap stocks on a year-on-year basis, reinforcing the shift toward domestically driven market ownership.

What It Means for Investors

The latest data reinforces a major structural change in Indian equities. While foreign investors continue to react to global risks and valuation concerns, domestic institutions—supported by strong SIP inflows and rising retail participation—are emerging as the market's primary source of liquidity.

This growing domestic participation has helped cushion the impact of foreign selling and could continue to provide stability to Indian equities even during periods of global volatility.