Foreign Investors' India Equity Holdings Hit 14-Year Low Amid Outflows; DIIs Dominate Market

• Foreign investors' equity holdings in India fell for the first time in three years in 2025, pushing their market share to a 14-year low of 15.5% since 2011.
• Equity assets under custody for overseas portfolio investors stood at $815 billion as of December 15, a 2.1% drop from $832 billion at the end of 2024, marking the steepest fall since 2022.
• Foreign funds pulled out nearly $17.97 billion from India's equity markets since January, even as benchmark indices Sensex and Nifty gained close to 9% in 2025.
• Domestic institutional investors (DIIs) injected over Rs 7.63 lakh crore, increasing their ownership to a record 18.26% by Q3, surpassing foreign investors in March and becoming the primary market anchor.
• Analysts suggest a potential rotation back to under-owned sectors like industrials, consumer discretionary, and financials as the AI trade intensity wanes and India's valuation premium slips.

Why It Matters: Foreign investors' India equity share hits 14-year low; DIIs now primary market anchors.