Foreign Investor Equity Holdings Decline to 15-Year Low Amid Rs 2 Lakh Crore Sell-Off in 2025, According to NSE Report
Foreign institutional and portfolio investors (FPIs) have drastically cut their equity holdings in India, with the value of NSE-listed stocks plummeting to a 15-year low. This decline follows a significant sell-off amounting to nearly Rs 2 lakh crore in 2025. The latest data reveals that FPI ownership in major indices like the Nifty 50 and Nifty 500 has hit record lows, indicating a trend of widespread selling across various market segments.
The September quarter of 2025 marked a notable decrease in foreign institutional ownership of Indian equities. FPI stakes in Nifty 50 and Nifty 500 companies fell by 43 and 46 basis points, respectively, reaching lows of 24.1% and 18%. This trend has been consistent since March 2023, reflecting unstable foreign capital flows. During the first half of FY26, FPI share in NSE-listed companies dropped by 63 basis points to 16.9%, the lowest level in over 15 years. This reduction was largely driven by net FPI outflows totaling $8.7 billion during the quarter. Consequently, the value of FPI holdings in NSE-listed companies decreased by 5.1% quarter-on-quarter, settling at Rs 75.2 lakh crore as of September 30, 2025. Despite this downturn, FPI holdings have shown a 17% annualized growth over the past two decades.
Investment Trends Among FPIs
Despite the overall decline, FPIs have maintained a strong presence in the financial sector while increasing their investments in communication services. However, they have adopted a cautious approach towards consumption and commodity-related sectors, reducing their stakes in consumer staples, energy, and materials. Their outlook on industrials remains negative, and they are slightly pessimistic about the information technology sector. In contrast, FPIs have maintained neutral positions in consumer discretionary, healthcare, utilities, and real estate, with a slightly positive sentiment following recent changes in the Goods and Services Tax (GST).
Domestic Mutual Funds on the Rise
In stark contrast to the decline in FPI holdings, domestic mutual funds have achieved record ownership levels across various market segments. In September 2025, domestic mutual funds invested Rs 1.64 lakh crore, marking their 18th consecutive quarter of positive inflows. This surge has increased their ownership stakes to 13.5% in Nifty 50, 11.4% in Nifty 500, and 10.9% in all NSE-listed companies. As a result, domestic institutional investors now hold 18.7% ownership in NSE-listed firms, surpassing FPI ownership for the fourth consecutive quarter. This trend highlights the growing influence of domestic investors in the Indian equity market.
Stability Among Individual Investors
Individual investors have shown remarkable stability in their ownership of NSE-listed companies, maintaining levels between 9.5% and 9.8% over the past nine quarters, with a recorded ownership of 9.6% in September 2025. This stability is bolstered by renewed retail investor inflows, which amounted to Rs 20,469 crore. Notably, when excluding the top 10% of companies by market capitalization, individual investor ownership has increased by 48 basis points, reaching a 19-year high of 16.7%. This indicates a growing interest in mid and small-cap stocks among retail investors, reflecting a shift in investment preferences within the market.
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