Within key indices, the share of FPIs in the Nifty 50 fell by 25 basis points (bps) quarter-on-quarter (qoq) to a more than 13-year low of 23.8%, while remaining broadly stable at 18.1% in the Nifty 500. One bps is one hundredth of a percentage point.
On the other hand, the share of domestic mutual funds in NSE-listed companies rose to a record high of 11.1%, aided by strong inflows from systematic investment plans and sustained equity buying. Active funds held 9.1% and passive funds the rest. This marked the 10th consecutive quarter of record highs.
The share of Domestic institutional investors—including mutual funds, insurance companies, banks and other financial institutions—was at 19%, staying ahead of FPIs across the NSE-listed universe—the Nifty 50 and Nifty 500.
The share of promoters in NSE-listed companies fell to a five-year low of 49.8% and a near seven-year low of 48.9% in the Nifty 500, while it edged up to 40.3% in the Nifty 50—the first increase in seven quarters.
Direct ownership by individual investors in NSE-listed companies fell by 25 bps q-o-q to 9.3%. On a combined basis—directly and through domestic mutual funds—individuals held 18.6% of the market, marginally lower than the 22-year high recorded in the previous quarter.
Household equity wealth increased by ₹10 trillion in the first three quarters of FY26 (April-December), taking the cumulative accretion since April 2020 to about ₹57 trillion. Total household holdings stood at ₹87.6 trillion, reflecting an annualized growth of 34.2% since March 2020.
Overweight, underweight sectors
FPIs stayed overweight on financial stocks, albeit with a softer tilt, and increased their overweight rating on communication services shares. They remained overweight in consumer staples and commodity-linked sectors including materials and large-cap energy, continued to be cautious on industrials, and maintained a neutral position on others, per the data.
Domestic mutual funds, on the other hand, strengthened their overweight stance on large-cap financials, while remaining neutral on mid- and small-caps in the sector, stayed constructive on mid-tier consumer discretionary, retained and were overweight on consumer staples and maintained a negative stance on commodity sectors including energy and materials.
The allocation by institutional investors to the Nifty 50, which has a 45% share of the total market capitalization, inched up to 60.9%, but remained steady in the top decile stocks, reflecting mid-cap outperformance in Q3.
In value terms, FPI holdings in NSE-listed firms rose 4.6% q-o-q to ₹78.7 trillion at the end of December. Domestic mutual funds’ holdings rose 7% q-o-q to an all-time high of ₹52.2 trillion, sustained by net equity inflows.
The overall market capitalization of the 2,942 listed companies stood at $5 trillion as of January end.
According to UR Bhatt, co-founder of investment platform Alphaniti Fintech, a reversal of FPI outflows after record sales last year would be contingent on the abatement of geopolitical risks—the end of the Ukraine war and resolution of the Iran-US standoff—and the US trade deal with India.
“If these risks recede, India, with its strong macro fundamentals, will be among the favorite destinations for risk-on trades,” said Bhat. The record outflow in 2025 resulted from the uncertainty of US tariffs and rising geopolitical tensions, he added.
On a monthly basis, individual investor participation in the capital markets segment eased to 13.3 million in January 2026 from 13.4 million in December 2025, indicating largely steady engagement, with a minor normalization at the start of the year, per NSE. In contrast, participation in the equity derivatives segment rose to 3.58 million from 3.48 million during the same period, with January marking the highest level in the past 12 months, according to the NSE data.
Active individual investors
On an annual basis, the longer-term trend shows a substantial expansion in the active individual investor base over the past decade, especially in the capital market segment, consistent with the ongoing financialization of savings, improved digital market access and greater retail familiarity with exchange-traded products.
Capital market participation rose to 35.4 million in the February 2025-January 2026 period from about 4.49 million in the February 2015-January 2016 period, while derivatives participation increased to 8.28 million from 710,000 over the same period. Participation confined only to derivatives remained relatively small and broadly stable at about 2 million.
Over the past one year, the number of investors participating exclusively in the capital market segment and exclusively in the equity derivatives segment has remained broadly stable, while the number of investors active in both segments declined, indicating some consolidation in the trading behavior of investors maintaining simultaneous activity across both segments.
About 96% of futures and options (F&O) investors traded in options.
Of the 126.5 million unique registered investors as of 31 January 2026, about 15.2 million traded at least once a month across equity cash and derivatives. Participation remained heavily skewed toward the cash market, with 11.6 million investors trading exclusively in the cash segment, as per the NSE data.
Modest participation
Derivatives participation was relatively limited in January: 1.86 million investors traded only in F&O. Within the derivatives-only category, activity was overwhelmingly options-driven—1.78 million investors traded only in options, predominantly index options (1.36 million), followed by those trading both index and stock options (333,000) and stock options alone (86,726).
Futures-only participation was modest at 32,608 investors, largely concentrated in stock futures (26,096). Overall, trading patterns continue to reflect a clear dominance of the cash segment, while participation in equity derivatives remains minuscule.
“The bias within F&O for options is likely to remain as it’s perceived to be safer by retail investors and has a lower transaction tax incidence as the same is computed on premium turnover compared to futures, where tax is computed on notional turnover,” said Sudhir Joshi, a consultant with Khambatta Securities.
