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Domestic institutional investors (DIIs) have emerged as a key stabilising force in Indian equity markets, helping counter volatility caused by fluctuating foreign capital flows, the Economic Survey said. As of September 30, 2025, DIIs held 18.7 per cent of equities listed on the National Stock Exchange.

Finance Minister Nirmala Sitharaman tabled the Economic Survey 2026–27 in Parliament on January 29.

The Survey noted that DIIs, especially mutual funds and insurance companies, have remained consistent net buyers of equities even during phases of foreign portfolio investor (FPI) selling. This steady domestic buying helped offset foreign outflows and supported market resilience.

FPIs during FY26, from April to December, showed fluctuating behaviour. The Survey said these flows were mainly influenced by global financial conditions rather than domestic macroeconomic factors. Data showed six months of net outflows and three months of sizeable inflows, resulting in a modest net balance for the year so far.

A key structural shift highlighted in the Survey is the change in ownership patterns. For the first time in Q4 FY25, the value of DII holdings surpassed that of foreign institutional investors (FIIs). This trend continued in FY26.

DII share rose to an all-time high of 18.3 per cent in Q2 FY26. At the same time, FII holdings fell to 16.7 per cent, a 13-year low.

The growing influence of domestic mutual funds has been central to this shift. In Q2 FY26, mutual funds’ share by value of holdings reached a record 10.9 per cent.

The Survey said this reflects sustained household inflows into market-linked instruments through systematic investment plans and other long-term investment routes.

The combined share of DIIs, retail investors and high-net-worth individuals rose to an all-time high of 27.8 per cent by value of holdings in Q2 FY26. This points to a more balanced and domestically anchored equity market.

During FY26, till December 2025, 235 lakh demat accounts were added. The total number crossed 21.6 crore. A key milestone was the crossing of 12 crore unique investors in September 2025. Nearly one-fourth of these investors were women.

The mutual fund industry also expanded sharply. It had 5.9 crore unique investors as of December 2025. Of these, 3.5 crore, as of November 2025, were from non-tier-I and tier-II cities. This highlights the spread of financial participation beyond major urban centres.

The share of individual investors rose from about 11 per cent in FY14 to 14.3 per cent in FY19, and further to 18.8 per cent by September 2025. In absolute terms, individual equity holdings increased to around Rs 84 lakh crore by September 2025, from Rs 8 lakh crore in FY14.

The direct share of individuals in equity markets increased gradually, from under 8 per cent in FY14 to about 9.6 per cent by September 2025. The indirect share nearly tripled over the same period to 9.2 per cent.

Between April 2020 and September 2025, household equity wealth rose by an estimated Rs 53 lakh crore, underlining the role of sustained participation in long-term wealth creation.

The Survey also flagged a clear shift in household financial savings. Between FY12 and FY25, the share of equity and mutual funds in annual household financial savings increased from about 2 per cent to over 15.2 per cent.

This trend has coincided with a sharp rise in SIP contributions. Average monthly SIP flows increased seven times, from under Rs 4,000 crore in FY17 to over Rs 28,000 crore in FY26, from April to November