Domestic Mutual Funds: Domestic investors are currently gaining dominance in the Indian stock market. Mutual funds, in particular, have strengthened their hold to the point where their market share has reached record levels. Growing investor interest, strong macroeconomic indicators, and regular SIP flows have made domestic mutual funds the most prominent investors in the market.
Record Ownership of Domestic Mutual Funds
| Parameter | Details |
|---|---|
| Market Segment | Indian Equity Market |
| Key Players | Domestic Mutual Funds (DMFs), Foreign Portfolio Investors (FPIs) |
| DMF Ownership | 10.9% (record level, 9th consecutive quarter high) |
| FPI Ownership | 16.9% (15-year low) |
| Quarterly DMF Investment | ₹1.64 lakh crore (FY 2025-26 Q2) |
| Average Monthly SIP Inflow | ₹28,697 crore |
| Active Schemes Ownership | 9% |
| Passive Schemes Ownership | 2% |
| Sector Focus | Large financial shares, mid-level consumer discretionary |
| Underweight Sectors | Consumer staples, commodities |
| Neutral Sectors | IT sector |
| Historical Context | Domestic investors stronger than FPIs for 4 consecutive quarters; last seen in 2003 |
| Implication | Strong domestic participation, growing investor confidence, stable market growth |
According to the latest report from the National Stock Exchange (NSE), domestic mutual funds’ share in listed equities has now reached 10.9%. This is the ninth consecutive quarter in which domestic mutual funds have increased their share, and this is considered an all-time high. Meanwhile, the share of foreign portfolio investors (FPIs) has fallen to a 15-year low of 16.9%.
Significant Surge in Investments
Domestic mutual funds invested ₹1.64 lakh crore in the second quarter of FY 2025-26, the largest quarterly investment amount ever. The biggest driver behind this was regular SIP inflows, which averaged ₹28,697 crore per month.
Ownership of active schemes increased by 9%, while passive funds remained stable at 2%. This clearly indicates that investors are no longer relying solely on safe options but are willing to take risks by investing in large and mid-tier companies.
Domestic Institutional Investors Outperform Foreign Investors
For the fourth consecutive quarter, domestic institutional investors (DIIs) have outperformed foreign investors. This was last seen in 2003.
Domestic mutual funds increased their holdings in large financial stocks and mid-tier consumer discretionary companies. They also deepened their underweight position in consumer staples, as competition from online and fast-track commerce companies increased.
Signals for the Market and Investors
The increasing share of mutual funds clearly indicates that domestic investors’ confidence in the market remains strong. Steadily increasing ownership and SIP flows are providing investors with opportunities for long-term gains and stability.
During this time, it has become important for investors to pay attention to the strategies and stock selection of domestic institutional investors.
FAQs
Q1: What is the current ownership of domestic mutual funds?
A1: Domestic mutual funds hold 10.9% of listed equity now.
Q2: How much did domestic mutual funds invest in Q2 2025-26?
A2: They invested ₹1.64 lakh crore in equities this quarter.
Q3: What is the average monthly SIP inflow for DMFs?
A3: Approximately ₹28,697 crore flows monthly via SIPs.
Q4: Which sectors are domestic mutual funds focusing on?
A4: Large financials and mid-level consumer discretionary sectors.
Q5: How does DMF ownership compare to FPIs currently?
A5: DMFs ownership stronger; FPIs share at 15-year low.
Disclaimer: This article is for informational and investment awareness purposes only. The information provided here should not be construed as investment advice. Always conduct your own research and consult a financial expert before investing.
