Understanding the Investment Trends in the Indian Stock Market
Over the past 12 years, investment behaviors among different groups in the Indian stock market have changed significantly. Data from 2012 to 2024 (in the image) reveals patterns of individual investors, foreign institutional investors (FIIs), and domestic institutional investors (DIIs).
(Source: Zerodha)
Notably, individual investors predominantly acted as sellers from 2012 to 2019, steadily reducing their positions in the market each year.
The Role of FIIs and DIIs
During these same years, FIIs mostly engaged in buying, with the exception of 2018. In contrast, DIIs exhibited mixed behavior: they were net sellers for the first three years, then shifted to aggressive buying for the next five years, followed by a dip in investment for one year. This pattern of ups and downs was characteristic of their investment strategies.
Significant Changes After 2020
After 2020, the dynamics began to shift. Individual investors became highly active in the market, contributing ₹1.65 lakh crore in 2024 alone, a substantial increase. DIIs also escalated their investments, with ₹94,000 crore in 2021, rising to ₹2.75 lakh crore in 2022, and ₹1.81 lakh crore in 2023. By 2024, their total investment reached a record ₹5 lakh crore, demonstrating increasing confidence among domestic investors.
FIIs Losing Ground
As domestic investors have increased their holdings, FIIs have reduced their presence in the Indian markets, currently holding at their lowest levels. Apart from a minor resurgence in 2023, FIIs have not engaged in significant buying in recent years, leading to a situation where domestic investors now play a more dominant role than ever before.
A Positive Outlook for the Market
This emerging trend is encouraging for the Indian stock market. For the first time, the market is being robustly supported by local investors, both individual and institutional. Without this support from domestic investors over the past 4 to 5 years, the market may not have performed as strongly as it has. This development highlights the growing strength and confidence of Indian investors.
Are domestic investors the real game changers in Indian markets? What’s your take on this shift? Share your thoughts in the comments below! If you found this blog helpful, don’t forget to SHARE it with your friends!
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✅ Early investing mistakes and learnings
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✅ Key takeaways for building a resilient investment portfolio.
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