Foreign Institutional Investor (FII) ownership of total Indian equities has decreased from 19.9% in April 2016 to 14.7% in April 2026, marking the lowest level since June 2012, according to JM Financial’s Fundamental Research report. In contrast, Domestic Institutional Investor (DII) ownership has increased, reaching 18.9% during the same period.
This change reflects a significant shift in market holding structures, as domestic mutual funds have achieved a record-high share of equity holdings. This trend has been driven by consistent inflows from Systematic Investment Plans (SIPs). The report describes this phenomenon as a “near-perfect counter-absorption,” noting that DIIs increased their stakes in 39 out of 41 Nifty stocks from which FIIs divested.
The broad scope of FII selling is evident as, over the past three years, 41 out of the 50 Nifty-50 stocks experienced net FII selling, indicating a macro-level decision to reduce allocations in India. The report reveals that the 12-month FII flow data reflects a market characterized by selling, with net outflows recorded in 10 out of 16 sectors.
Sector-wise analysis shows that the IT, Banking, Financial Services, and Insurance (BFSI), and Fast-Moving Consumer Goods (FMCG) sectors suffered the most significant outflows, with losses of $9,222 million, $6,056 million, and $3,744 million, respectively. These sectors account for a large portion of Nifty weightage, elucidating the steady decline in index-level FII ownership. March 2026 was particularly noteworthy, with the BFSI sector alone facing $6,488 million in outflows.
The IT sector has consistently recorded outflows almost every month during this period, with no significant recovery noted. The report indicates a clear sectoral shift, with FIIs moving towards globally comparable and earnings-resilient sectors such as Communication Services and Healthcare, while pulling back from domestic consumption, commodities, and rate-sensitive financials.
Despite the general trend of exits from consumption and financial sectors, FII inflows remain strong in the Capital Goods sector, totaling $2,894 million, hinting at ongoing confidence in the manufacturing and infrastructure cycle. The Telecom sector also saw a net positive inflow of $2,914 million, notwithstanding some weaker months.
In April 2026, the Power sector recorded an FII inflow of $584 million, followed by Capital Goods at $455 million and metals at $126 million.
Noteworthy companies experiencing significant FII sell-offs by percentage change include KPIT Technologies (-12.9%), Axis Bank (-11.7%), and Patanjali Foods (-10.9%). Conversely, stakes were increased selectively in companies like 360 ONE (+22.8%), GE Vernova T&D (+17.8%), and One 97 (+7.9%).
The report stresses that some of the strongest earnings-per-share compounders are facing the most substantial FII selling, suggesting that these exits are not solely influenced by earnings growth.
Published on May 9, 2026.
