Who Owns India Inc? Retail Investors Rise as FPIs Retreat to 15-Year Lows

Understanding who owns India Inc. is crucial to understanding the true forces that drive India’s stock market. India Inc refers to all publicly listed companies in India across sectors such as banking, technology, FMCG, manufacturing, energy, automobiles and more. Together, these companies represent the backbone of India’s corporate economy, accounting for trillions of rupees in market value, employment generation, exports and capital formation.

Ownership patterns tell a deeper story. They reveal who has influence, who takes risks, who supports markets during volatility and how domestic vs global investors shape long-term trends. A cumulative ownership view combining promoters, foreign investors, domestic institutions and individual households provides a complete picture of capital flows, risk appetite and structural shifts within India’s fast-evolving equity ecosystem.

This is exactly what the India Ownership Report – September 2025 captures: a detailed breakdown of who owns India’s listed markets, how ownership has shifted over time and what it means for future market behaviour. The findings from Q2FY26 show a dramatic reshaping of India’s equity landscape, one where domestic capital is rising, foreign flows are retreating and retail investors are becoming long-term market stabilisers.

Promoters Hold Ground, but Government Stake Slips

Promoter ownership in NSE-listed companies remained broadly stable at 50.1 per cent in September 2025, marking a pause after four quarters of decline. While private Indian promoters held steady at 32.2 per cent, foreign promoters inched up to a nine-quarter high of 8.4 per cent, offsetting a marginal drop in domestic promoter share.

Government ownership, however, slipped by 10 basis points quarter-on-quarter to 10 per cent, reversing part of the gains made over the previous year. This moderation came even as PSU banks outperformed the Nifty PSU Bank Index rose 4.5 per cent during the quarter, in contrast to a 3.8 per cent fall in the broader Nifty Total Market Index. Over the longer term, the government’s stake in listed companies has declined significantly due to its ongoing disinvestment strategy and market listing of public enterprises.

FPI Ownership at a 15-Year Low

The most striking trend in Q2 FY26 is the continued retreat of foreign portfolio investors (FPIs). Their share in NSE-listed companies fell to 16.9 per cent, the lowest level in over 15 years. FPI holdings declined 5.1 per cent quarter-on-quarter to Rs 75.2 lakh crore, with net outflows of US$8.7 billion in Q2 alone. This pullback follows a broader trend of volatility in global capital flows since 2023, influenced by high US interest rates, elevated Indian valuations and geopolitical uncertainty.

Despite this decline, FPIs remain key holders of Indian equities, having grown their holdings at a robust 17 per cent annualised rate over two decades, marginally outpacing the overall market capitalisation growth of 16.1 per cent. Their current positioning is defensive overweight on Financials and Communication Services, while underweight on commodity and consumption sectors such as Consumer Staples, Energy and Materials. Industrials remain the most under-owned sector in FPI portfolios.

Domestic Mutual Funds Extend Record Run

In sharp contrast to FPIs, domestic mutual funds (DMFs) continue to expand their dominance. Their ownership climbed to an all-time high of 10.9 per cent in NSE-listed companies, up 34 basis points quarter-on-quarter, marking the ninth consecutive quarter of record highs. DMFs infused Rs 1.64 lakh crore into equities during Q2 FY26, their highest-ever quarterly investment. This sustained momentum is underpinned by consistent Systematic Investment Plan (SIP) flows averaging Rs 28,697 crore per month, a 20.6 per cent year-on-year increase.

Within mutual funds, active funds account for 9 per cent of total ownership, while passive funds remain steady at 2 per cent. The share of DMFs in the floating stock (free-float market capitalisation) now stands at 21.9 per cent, the highest on record, reflecting a growing domestic footprint across all segments. This relentless rise in DMF ownership also means that domestic institutional investors (DIIs), which include mutual funds, insurers and banks, now collectively hold 18.7 per cent of India’s listed equity market, surpassing FPIs for the fourth straight quarter, a feat last achieved in 2003.

Individual Investors Strengthen Hold — Direct and Indirect

Individual investors’ direct share in NSE-listed companies remained steady at 9.6 per cent, but when combined with mutual fund holdings, their effective ownership has reached 18.75 per cent, a 22-year high. This marks the fourth consecutive quarter where individuals, both retail and HNIs, have collectively surpassed FPIs in ownership share. The shift underscores India’s deepening retail participation, backed by digital trading platforms, SIP penetration and growing trust in equity as a long-term wealth creator.

Household equity wealth now stands at an estimated Rs 84 lakh crore, with a five-year CAGR of 29.8 per cent and ten-year CAGR of 21.1 per cent. Despite a temporary Rs 2.6 lakh crore dip in Q2 due to market correction, cumulative household equity wealth has risen by Rs 53 lakh crore since April 2020. Another structural shift is visible in retail investors’ preferences: individuals are increasingly diversifying beyond large caps. Their ownership in mid- and small-cap companies has reached a 19-year high of 16.7 per cent, reflecting the rise of active stock-picking and interest in new-age businesses.

Concentration Falls — Broader Institutional Diversification

A noteworthy aspect of this quarter’s report is the fall in the Herfindahl–Hirschman Index (HHI) — a measure of portfolio concentration. Institutional investors are now spreading investments across more companies, with the HHI for institutional portfolios dropping to 186, signalling wider diversification.

DMFs: HHI fell to 145, showing increased exposure to mid-tier large caps.

FPIs: HHI dropped to 258, far below the pandemic-era peak of 411, as they expanded holdings across ~2,000 companies, up from ~1,300 four years ago.

Banks and insurers’ concentration fell to a 20-year low of 203, while individuals remain the most diversified group (HHI: 63). This indicates that while institutional money is still gravitating toward stability (Nifty50 share in portfolios up to 60.7 per cent), exposure to mid-caps and emerging sectors is steadily broadening.

Sector Preferences: Diverging Domestic vs. Foreign Flows

Both FPIs and DMFs are displaying distinctly different sectoral preferences:

FPIs: Overweight on Financials and Communication Services, cautious on Consumption, Energy and Materials and underweight on Industrials.

DMFs: Overweight on Financials and mid-tier Consumer Discretionary; neutral on IT; and underweight on Consumer Staples, Energy and Materials.

This divergence shows how global investors remain wary of India’s high consumer valuations, while domestic investors continue to bet on consumption and financial deepening.

The Rise of Indian Households as Market Movers

Perhaps the most important takeaway from the report is the shifting balance of market power. A decade ago, FPIs held a clear dominance; their share of the Indian market was 11 percentage points higher than individuals in 2014. Today, that gap has reversed, with Indian households now owning 1.9 percentage points more than FPIs.

This transformation is not merely numerical. It represents a localisation of market ownership, reducing India’s dependence on foreign flows. The consistent inflow through SIPs has effectively turned retail investors and mutual funds into stabilisers cushioning volatility caused by foreign selling. This transition mirrors the evolution of developed markets, where domestic savings play a greater role in sustaining equity markets.

Investor Takeaway

The September 2025 ownership trends reflect a decade-long shift in India’s equity ecosystem from foreign-led to domestically anchored. FPIs, once the dominant force, are gradually ceding ground to mutual funds and retail investors. With DMFs hitting record highs, FPIs at a 15-year low and individual ownership at a 22-year high, India’s market structure is becoming more resilient, diversified and domestically driven.

For investors, this evolution offers two key takeaways:

• Long-term domestic capital is now the backbone of the market, reducing vulnerability to foreign outflows.
• The rise of retail investors and mutual funds means price discovery is increasingly influenced by domestic sentiment, not just global liquidity.

In essence, India’s equity ownership story is becoming truly Indian, shaped by its savers, sustained by its mutual funds and strengthened by its confidence in long-term growth.

Disclaimer: The article is for informational purposes only and not investment advice.