Mutual fund holdings in Nifty-listed companies surge to an all-time high of 8.81% in the December quarter

The mutual fund (MF) share in companies listed on the National Stock Exchange (NSE) surged to a historic high of 8.81% in the December quarter, up from 8.73% in the preceding quarter. This remarkable increase was largely propelled by substantial net inflows totaling Rs 58,198 crore during the period.

Despite substantial inflows, the collective share of domestic institutional investors (DIIs) experienced a marginal decline to 15.96% during the same period.

Foreign institutional investors (FIIs) also saw a decrease in their share, dropping to 18.19% by December 31, 2023. This shift is notable as it hints at a potential overtaking of FIIs by DIIs in the forthcoming quarters.

The gap between FII and DII holdings has notably narrowed, reaching an all-time low ratio of 1.14 as of December 31, 2023, down from a high of 1.99 in March 31, 2015.

Significantly, the share of Life Insurance Corporation of India (LIC), the nation's largest institutional investor, declined to an all-time low of 3.64% by December 31, 2023. This decrease is attributed to profit booking amidst bullish market conditions.

Insurance companies collectively divested a net amount of Rs 15,622 crore during the quarter, with a significant portion linked to LIC's strategic moves in equity investments.

Additionally, the combined institutional share, comprising both FIIs and DIIs, dipped to 34.15% by the end of December 31, 2023.

Furthermore, the share of retail investors marginally decreased to 7.57% by December 31, 2023, reflecting evolving market dynamics and investor behavior.