Increased Domestic Institutional Ownership in BSE500 Stocks: A Surge to 16.9% in Q4 Highlights Investment Potential

  • The Indian stock market is experiencing pressure due to sustained foreign capital outflows, with Foreign Institutional Investors (FII) selling off Indian equities worth nearly ₹25,000 crore in the first seven trading sessions of May.
  • However, this overseas selling has been offset by continuous buying from Domestic Institutional Investors (DII), reflecting a shift in the market’s driving forces.
  • Analysts suggest that DII, whose ownership in the BSE500 universe is at an all-time high, are now the primary drivers of the Indian stock market, a shift from the previous dominance of FII.

Amid sustained foreign capital outflows, the Indian stock market is under pressure. However, Domestic Institutional Investors (DII) continue to buy, offsetting the selling by Foreign Institutional Investors (FII). This article explores this shift in market dynamics and its implications.

Shift in Market Dynamics

During 2009 – 2014, FII played a crucial role in India’s markets, largely due to quantitative easing measures in Developed Economies. This period saw a net infusion of $110 billion from FII versus $12 billion selling from DIIs. However, with the tapering off of quantitative easing, DII have stepped up as the primary players, channeling $114 billion into the markets compared to $47 billion from FII during CY 2015- 2023, according to a report by Elara Capital.

Role of Domestic Institutional Investors

Elara Capital notes that $70 billion of DII buying came in the past three years, a move underpinned by a buoyant retail investor participation via the systematic investment plans (SIP) route. The report suggests that the structural transition from savings in physical assets to financial ones has cemented the role of domestic flows as the dominant force in the market. This was reflected in CY22 when, despite geopolitical uncertainty, inflation concerns, and a challenging interest rate environment, FII withdrew $17 billion, and the Nifty corrected by a mere 6%.

Promoter Ownership

Promoter ownership in the BSE500 universe has recently rebounded after initially declining up to CY19, primarily influenced by decreasing government stakes. Real estate still has the highest promoter ownership while the rally in public sector banks (PSB) has pushed up ownership of the government within the BSE500 universe.

DII and FII Activity Trends

Institutional holdings have declined 108 bps from its peak in March 2023 to 37% on the back of sustained selling from FII. Despite seeing inflows of $1.4 billion in Q4FY24, FII share in the BSE500 has fallen 103 bps YoY and 48 bps QoQ to an all-time low of 20.1%. This is partly due to the underperformance of the BFSI space in Q4FY24. However, excluding this, FII share in the listed space has increased by 26 bps QoQ.

Conclusion

The shift in market dynamics from FII to DII dominance has significant implications for the Indian stock market. With DII stepping up as the primary players and the rise in domestic flows, the market is experiencing less volatility. However, the sustained foreign capital outflows continue to exert pressure on the market, making the future outlook uncertain.

Don't forget to enable notifications for our Twitter account and Telegram channel to stay informed about the latest cryptocurrency news.
spot_imgspot_imgspot_imgspot_img

Latest News

Trader Loses $122K in Solana (SOL) After GME Memecoin Bet Fails Spectacularly

A cryptocurrency trader recently faced significant losses after...

Dow Jones Surges Past 40,000, Hits Record High; Market Watchful of Upcoming Nvidia (NVDA) Earnings

```html Dow Jones futures, along with S&P 500 and...

Bitcoin (BTC) Poised to Surpass $70,000 in 48 Hours: Will FOMO Ignite a New Rally?

Bitcoin's potential to break the $70,000 mark over...

Market Buzz: $15 Million Ripple (XRP) Transfer Ignites Speculation Wave

The cryptocurrency market has experienced a significant shift,...
spot_imgspot_imgspot_imgspot_img

PRO Analysis

Unlock Crypto Potential: Expert Analysis on Surging Bitcoin (BTC) and Altcoin Trends

One widely followed crypto analyst believes digital assets...

Expert Analysis: Solana (SOL) Price Prediction for End of May Revealed

Syncracy Capital's co-founder Daniel Choung recently shared his...

XRP (XRP) Surges: A Detailed Analysis of Its Robust Market Comeback

XRP has recently shown a strong comeback, bouncing...

May 17, 2024 Market Movers: Mahindra & Mahindra (M&M), Grasim, TCS, Cipla Lead Active Stocks – Full Analysis Inside

```html Today's stock market saw notable movements, with indices...

Ether (ETH) Shows Promise on Coinbase Amid Bitcoin (BTC) Withdrawals: An In-Depth Analysis

In a recent analysis, Coinbase highlighted Ether's underwhelming...
Gideon Wolf
Gideon Wolfhttps://en.coinotag.com/
GideonWolff is a 27-year-old technical analyst and journalist with extensive experience in the cryptocurrency industry. With a focus on technical analysis and news reporting, GideonWolff provides valuable insights on market trends and potential opportunities for both investors and those interested in the world of cryptocurrency.
spot_imgspot_imgspot_imgspot_img

Dow Jones Surges Past 40,000, Hits Record High; Market Watchful of Upcoming Nvidia (NVDA) Earnings

```html Dow Jones futures, along with S&P 500 and Nasdaq futures, are set to open Sunday evening, focusing market attention on Nvidia's upcoming earnings. ...

Stock Market Soars to Record Peaks as Inflation Cools; Walmart (WMT) Surges Following Strong Earnings Report

```html The stock market rally had impressive gains following tame inflation reports and cooling economic data, with the Dow Jones, S&P 500, and Nasdaq...

Markets Open: BSE & NSE Resume Trading Tomorrow, Key Insights on Economic Impact

```html This week, the Indian stock market is gearing up for a significant event involving a special live trading session on...