Rise of Domestic Ownership
In recent years, the landscape of ownership in the Indian stock market has shifted significantly. Data from Whiteoak Capital Mutual Fund reveals that Foreign Institutional Investor (FII) ownership has decreased from around 22% a decade ago to nearly 18%. Meanwhile, Domestic Institutional Investor (DII) ownership has grown from 10.3% to 16.8%. This change has nearly closed the gap between FIIs and DIIs, which was once around 12% and is now less than 2%.
Increasing Domestic Retail Participation
Adding to this shift is the rise in domestic retail participation. When combined with the ownership of domestic institutions, the influence of local investors on the Indian equity market becomes even more significant. This means that Indian markets are becoming more self-reliant, with a stronger base of domestic investors. The increased involvement of local investors helps stabilize the market and reduce dependency on foreign funds.
The growing domestic ownership is good news for the Indian stock market. Previously, external events could easily disturb the market as FIIs moved their funds in and out. This often led to volatility and uncertainty. Now, with more domestic money invested, the market is less affected by foreign fund flows. The stability provided by domestic investors has significantly reduced the impact of external events on the Indian market.
If this trend continues for the next few years, it is likely that domestic ownership will surpass foreign ownership entirely. This shift would make foreign influence on the Indian equity market less significant. As domestic confidence in the equity markets grows, it will likely lead to a more stable and resilient market environment. This could encourage even more local investments, further strengthening the market’s foundation.
Positive Long-Term Impact
The increasing domestic ownership reflects a growing confidence among Indian investors in their own market. This self-reliance is a positive development and is expected to yield good results in the long term. As more local investors participate in the market, it will likely lead to more stable growth and reduced volatility. This trend is a sign of a maturing market that can better withstand global uncertainties.
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