Data published on Monday showed foreign institutional investors holding 15.1 per cent of Indian equities — a share last recorded seventeen years ago — while the absolute value of those same positions had expanded 3.6-fold from 2012 levels to around $783 billion. Analysts noted that the gap between the two measures warrants reading ownership percentage alongside total capital deployed rather than as a standalone indicator.

A report from OmniScience Capital pointed to a notable shift in market composition, with domestic investors — retail participants among them — accounting for a growing share of overall activity.

FPI AUC records from 2012 place FII holdings at roughly $217.3 billion, a period during which that investor category held somewhere between 15 and 16 per cent of ownership. From roughly $300 billion around 2015, the total climbed to approximately $550 billion by 2020, then continued upward until touching a high point of near $930 billion in September 2024.

Valued at roughly $783 billion at present, the ownership share had nonetheless been losing ground even as FII holdings climbed — slipping from around 30 per cent in 2015 to about 20 per cent in 2020, then settling near 17 per cent by 2024. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, attributed the pattern to domestic investors expanding their market presence at a pace that outstripped the rate of FII participation growth.

One factor the document identified in the gradual erosion of FII's share was a broader shift in how Indian households manage their wealth, with a growing portion of savings now flowing into financial instruments rather than being tied up in property.

Retail investor participation in domestic equities remains below developed-market norms, meaning a sustained rise in local inflows has the capacity to erode the share of holdings attributable to foreign institutional investors — a dynamic that lends proportion to the roughly $50 billion in FII net outflows recorded since 2024. That figure stands against roughly $40 billion worth of net inflows recorded across the 2017-to-2024 period, a span during which the FII asset base had yet to reach its current scale.

Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital, pointed to currency depreciation as a further factor weighing on the dollar value of those holdings.

Downward pressure on the broader market persists, yet individual equities may still offer pockets of value, the report indicated. Outflows driven by foreign institutional investors can weigh on valuations, yet a counterbalancing force often materialises when domestic institutional money moves in to absorb that pressure.