Mutual funds' ownership in NSE-listed companies surges to record high in June quarter: Report

Domestic mutual funds’ (DMF) ownership in Indian equities surged to a record high in the first quarter of the current financial year (Q1 FY26), while foreign portfolio investors’ (FPI) ownership in National Stock Exchange (NSE) listed companies has shown a steady decline since March 2023, NSE said in its monthly report, Market Pulse.

As per the report, mutual funds infused ₹1.2 lakh crore into equities in the first quarter of the current financial year, marking the 17th consecutive quarter of positive net flows.

"DMFs’ share rose further to a fresh all-time high of 13%, 11% and 10.6% in the NIFTY50, NIFTY500 and NSE-listed companies, respectively," NSE said.

The strong momentum of mutual funds came on the back of continued retail participation through systematic investment plans (SIPs).

"Average monthly SIP inflows at ₹26,863 crore in Q1 FY26 rose by 2.9% quarter-on-quarter (QoQ) and 28.9% year-on-year (YoY). Within the overall DMF share, passive funds' share remained broadly steady at 1.9%, while that of actively managed funds expanded by 22 basis points (bps) QoQ to 8.6%, NSE said.

What did mutual funds buy and sell in Q1?

Mutual funds realigned their portfolio closer to the index and reduced their overweight stance on large-cap financials and tapered their negative bias on consumer staples, NSE noted.

They also turned positive on materials and smaller consumer discretionary stocks. At the same time, they turned incrementally bearish on energy, reflecting the impact of softening crude oil prices, weakening refining margins and policy and regulatory uncertainty, NSE's Market Pulse report noted.

The NSE report added that the share of individual investors slightly inched up in the June quarter.

Direct non-promoter ownership by individual investors in NSE-listed companies inched up by 9 basis points sequentially to 9.6% in the June 2025 quarter. The rise came despite net outflows of ₹13,136 crore from individual investors, reflecting their continued tilt towards mid- and small-cap stocks that outperformed large caps during the quarter. Interestingly, their share in the Nifty 50 declined slightly, suggesting stronger participation outside the benchmark index.

FPI investment trend

Foreign portfolio investor (FPI) ownership in NSE-listed firms dropped by 16 bps QoQ to 17.3%—its lowest level in 13.5 years—extending a downtrend that began in March 2023. However, FPIs raised their exposure to NIFTY50 companies by 21 bps to 24.5%, the highest in six quarters, underlining a preference for large-cap stability amid macro and market uncertainties. Holdings in the Nifty 500 were largely unchanged at 18.5%, NSE said.

What did FPIs buy and sell in Q1 FY26?

FPIs reinforced their overweight stance on financials, turned positive on communication services, and stayed cautious on consumer staples, energy, and materials. Industrials continued to see a negative stance, while IT, healthcare, consumer discretionary, utilities and real estate were largely viewed neutrally.

Promoter ownership extended its downtrend, slipping for the fourth consecutive quarter. In NSE-listed companies, promoter share fell 13 bps to 50%, a nine-quarter low, while in the NIFTY500 it declined 27 bps to 49.3%, the lowest in 22 quarters. The NIFTY50 saw a sharper fall of 32 bps to 40.2%, a level not seen in nearly 23 years, driven by a reduction in both private Indian and government holdings.

Government ownership showed a mixed trend. While its share in NSE-listed and NIFTY500 companies rose modestly by 17 bps and 30 bps to 10.1% and 10.9%, aided partly by the strong 15% rally in PSU bank stocks, its presence in NIFTY50 companies slipped further by 14 bps to 6.7%, the third straight quarterly decline.