Promoter stakes hit two-decade low as retail investors and mutual funds tighten grip on India Inc
India's corporate landscape undergoes seismic power shift
Promoters lose ground as retail and institutional money floods in
Retail investors and mutual funds aren't just dipping toes—they're diving headfirst into ownership stakes. While traditional promoters watch their influence dilute to levels not seen since the dot-com era, Main Street and fund managers collectively tighten their grip on corporate India.
The numbers don't lie: promoter stakes keep sliding while everyone else piles in. Retail participation hits new peaks, mutual funds amplify their positions, and suddenly the old guard finds itself playing musical chairs with voting rights.
Some call it democratization of ownership—others see it as the natural consequence of promoters finally realizing that holding fewer shares means someone else might actually read the quarterly reports. Either way, the balance of power isn't just shifting—it's being rewritten by whoever brings the capital.
FPIs prefer Nifty
Foreign portfolio investors (FPIs) have continued to cut their overall stake due to global volatility, down to 17.3 per cent – the lowest in 13.5 years. Their portfolios became more concentrated in financials and communication services, while remaining cautious on staples, energy, materials, and staying bearish on industrials.
However, FPIs showed a clear preference for scale and resilience, lifting their ownership in the Nifty 50 to a six-quarter high of 24.5 per cent. Their holding in Nifty 500 stayed broadly steady at 18.5 percent.
MFs surge
In sharp contrast, domestic mutual funds (DMFs) climbed to a fresh record share of 10.6 per cent in NSE-listed companies, and 13 per cent in the Nifty 50. This was powered by strong retail participation through systematic investment plans (SIPs), which averaged ₹26,863 crore a month in Q1FY26 — up nearly 29 per cent from a year earlier.
Active funds expanded their share to 8.6 percent, while passive funds held steady at 1.9 per cent. DMFs have also realigned closer to benchmark indices: trimming overweight exposure to large financials, easing their underweight stance on consumer staples, and turning positive on materials and smaller consumer durables, even as they grew cautious on energy.
For the third consecutive quarter, domestic institutional ownership stayed ahead of FPIs, widening the lead to levels not seen since 2003.
Retail rise
Individual investors’ direct ownership ticked up to 9.6 per cent, led by continued preference for mid- and small-cap stocks. While they registered net outflows of ₹13,136 crore during the quarter, the rotation toward smaller companies kept their overall share intact.
When combined with mutual fund investments, retail investors now own a record 18.5 per cent of market capitalisation, surpassing FPIs for the third straight quarter. Just a decade ago, in March 2014, FPIs commanded an 11 percentage point lead over households— a gap that has not only closed but turned negative at -1.2 percentage points this June.
Published on August 25, 2025
