Share of mutual fund holding rises to record high

The share of mutual funds (MFs) in companies listed on the National Stock Exchange (NSE) rose to an all-time high of 8.81% in the December quarter from 8.73% in the previous quarter, primarily driven by strong net inflows of Rs 58,198 crore during the quarter.

Further, as per the latest analysis by primeinfobase.com, the share of domestic institutional investors (DIIs) as a whole decreased marginally to 15.96% in the December quarter despite net inflows of Rs 54,925 crore during the quarter.

Meanwhile, the share of foreign institutional investors also declined to 18.19% as on December 31, 2023, down by 21 basis points from 18.40% on September 30, 2023, again despite net inflows from FIIs of Rs 50,588 crore during the quarter.

This assumes significance as DIIs seem set to overtake the FIIs in the next few quarters.

“The gap between FII and DII holding narrowed further to an all-time low in this quarter… The FII to DII ownership ratio also decreased to an all-time low of 1.14 as on December 31, 2023 from an all-time high of 1.99 in quarter ending March 31, 2015,” stated a release by primeinfobase.com.

Incidentally, Life Insurance Corporation of India (LIC), which is the country’s largest institutional investor, saw its share (across 277 companies where its holding is more than 1%) declining to an all-time low of 3.64% as on December 31, 2023 from 3.73% as on September 30, 2023.

According to Pranav Haldea, Managing Director, PRIME Database Group, this was primarily on account of profit booking to take advantage of bullish markets.

Insurance companies, cumulatively, sold a net of Rs 15,622 crore during the quarter, a major part of which is attributable to LIC since LIC commands a lion’s share of investments in equities by insurance companies (at least 68% share or Rs 13.02 lakh crore).

Meanwhile, the combined share of institutional investors—FII and DII—also declined to 34.15% in quarter ending December 31, 2023, down from 34.39% in quarter ending September 30, 2023.

Further, the share of retail investors (individuals with up to Rs 2 lakh shareholding in a company) decreased marginally to 7.57% as on December 31, 2023 from 7.62% on September 30, 2023.

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