Domestic Market Ownership Rises for 5th Quarter in a Row to 24.44% in Dec

New Delhi: The equity ownership of domestic investors, including institutions and high networth individuals, touched an all-time high of 24.44 per cent in December quarter, making it the fifth consecutive quarterly increase. Retail investors' ownership in the market stood at 7.23 per cent in December 2022, marginally down from 7.34 per cent in September 2022. But in rupee terms, the same increased to Rs 19.94 lakh crore from Rs 19.48 lakh crore in the previous quarter, registering an increase of 2.35 per cent.

In September 2022, the share was 24.25 per cent, according to data collated by market information major Prime Database, based on the shareholding patterns of 1,832 of the total 1,857 companies on NSE for the quarter to December 2022.

According to Pranav Haldea, managing director of Prime Database Group, this was the fifth consecutive quarter of increase from 22.37 per cent in September quarter 2021 and showcases the rising dominance of domestic investors. Net inflows from domestic institutional investors (DIIs) stood at Rs 27,134 crore during the quarter, as against net inflows from foreign institutional investors (FIIs) at Rs 47,349 crore, resulting in their shareholding marginally increasing to 20.18 per cent in December 2022, from 19.98 per cent in September 2022, massively down from 23.30 per cent in March 2015, when the combined share of DIIs, retail and HNIs was only 18.47 per cent.

The widest gap between FII and DII holding was in March 2015 quarter, when DII holding was 55.45 per cent lower than FII holding. The FII to DII ownership ratio has also declined to an all-time low of 1.32 in December 2022 from 1.33 as of September 2022. Over a 13-year period, since June 2009, the FII share has increased from 16.02 per cent to 20.18 per cent while DII share increased from 11.38 per cent to 15.32 per cent.

On the other hand, total institutional investor share (FIIs and DIIs) reached 35.50 per cent in December 2022, up from 34.99 in September 2022.

Share of domestic mutual funds rose for the sixth quarter running and reached an all-time high of 8.09 per cent in December 2022, up from 7.97 per cent in September 2022. This was after 5 quarters of consecutive decline from March 2020 when it was 7.96 per cent to June 2021 when it was 7.25 per cent.

Share of insurance companies as a whole also increased to a 5-year high of 5.65 per cent in December 2022 from 5.57 per cent in September 2022. LIC continues to command the lion's share of investments in equities among insurers; at least 70 per cent share or Rs 10.91 lakh crore. LIC's share across 268 companies where its hold is more than 1 per cent, increased to 3.95 per cent in December 2022 from 3.87 per cent in September 2022.

Share of DIIs as a whole thus increased to an all-time high of 15.32 per cent in December 2022 from 15.01 per cent in September 2022. In rupee terms, their holdings went up to Rs 42.28 lakh crore, an increase of 6.07 per cent sequentially.

On the other hand the share of retail ownership (those investing less than Rs 2 lakh) has declined marginally to 7.23 per cent in December 2022, from 7.34 per cent in September 2022. But in rupee terms, the same increased to Rs 19.94 lakh crore in the reporting period from Rs 19.48 lakh crore in the previous quarter.

The share of HNIs (individuals with more than Rs 2 lakh shareholding in a company) also declined to 1.89 per cent December 2022 from 1.90 per cent in September 2022. As such, the combined retail and HNI share stood at 9.12 per cent in December 2022, down from 9.24 per cent in September 2022.

In rupee terms, the holding of FIIs stood at Rs 55.70 lakh crore in December 2022, an increase of 4.98 per cent from Rs 53.06 lakh crore in September 2022. This is in spite of the fact that they pulled out Rs 3,162 crore from consumer durables and oil, gas & consumable fuels sector during the quarter while investing Rs 19,391 crore in financial services & FMCG.

According to Haldea, FIIs are the largest non-promoter shareholders in the domestic market. The top 10 companies by market capitalisation accounted for 90.62 per cent of overall FII holding.

The share of the government (as promoter) in NSE companies also rose to a 4-year high of 7.99 per cent in December 2022 from 6.87 per cent in September 2022 boosted by the outperformance by public sector banks.