The report, released on Tuesday, highlighted a clear trend among individual investors, including retail and high net worth individual (HNI) investors, to demand professional supervision over individual stock selection.
The combined share of individual investors in NSE-listed companies fell to a five-year low of 9.11% as on March 31, 2026, from 9.28% as on December 31, 2025, according to data cited by the report. In contrast, the share of domestic mutual funds reached an all-time high of 11.46% in Q4 FY26, marking the eleventh consecutive quarter of growth.
What leads to a shift?
“This is indicative of the growing maturity of individual investors, who are now increasingly choosing to invest through mutual funds through professional fund managers rather than investing directly in stocks,” said Pranav Haldia, managing director, PRIME Database Group.
To illustrate this structural change over the past 14 years, Prime Infobase noted that mutual funds accounted for just 3.21% in March 2012, while individual investors accounted for 8.51%. “After 14 years, while the share of individual investors has remained broadly the same at 9.11%, the share of MFs has increased to 11.46%,” it said.
Domestic Power vs. Foreign Retreat
The report notes that as retail investors pour money into mutual funds through Systematic Investment Plans (SIPs), domestic institutions continue to be the primary stabilizer of the Indian market amid continued FII outflows. FII share fell to a 14-year low of 16.13% in the January-March quarter of FY26. Haldia said the balance of ownership continues to tilt inwards, reinforcing the growing ‘self-reliance’ of the market, with MFs alone expected to overtake FIIs in the coming quarters.
“The trend started with demonetisation in 2016, accelerated during the Covid years, and has further increased in the last one-and-a-half years due to geopolitical issues and valuation concerns of FIIs,” he added.
The gap between FII and MF holdings has narrowed to just 4.67%, down from a peak gap of 17.14% in 2015, according to the report. As the share of mutual funds continued to grow after overtaking FIIs in Q4 of FY25, the share of DIIs reached another all-time high of 19.24% in Q4 of FY26. Prime Infobase added, “While MFs, of course, played a major role, insurance companies, banks and AIFs also played their part with net purchases of Rs 28,784 crore, Rs 1,621 crore and Rs 512 crore respectively during the quarter.”
Which sectors performed well?
The report highlighted that DIIs have increased their allocation most significantly to healthcare (up to 6.93% in Q4 FY26), while cutting back on IT. Foreign institutional investors (FIIs), meanwhile, shifted to commodities and away from financial services.
Prime Infobase highlighted that the share of private promoters fell to a nine-year low of 40.58% on March 31 this year, adding that the share has declined by 464 basis points from 45.22% on December 31, 2021. While the share of Indian private promoters fell to around 32%, that of foreign promoters was only 46%. “Meanwhile, the government’s share (as promoter) in companies listed on the NSE increased from 8.96% to 9.42% during the quarter,” the report said.
Stocks favored by the ‘trinity’ of promoters, FIIs and DIIs
Despite the wide swings, Prime Infobase identified 35 companies where the “trinity” of promoters, FIIs and DIIs simultaneously increased their stake during the fourth quarter of FY26. Some of the notable names among them include GMR Airports, IRB Infrastructure Developers, Godrej Agrovet, Rategain Travel Technologies and Inox Green Energy Services.
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times.)
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