New Delhi, October 12: Indian mutual funds have narrowed their share of domestic equity ownership with foreign portfolio investors to around 230 basis points — the lowest gap on record — as sustained domestic retail inflows meet record foreign selling, according to NSDL data reported by The Economic Times.
Mutual funds held a record 11.7% of Indian equities in September, while the FPI share slipped below 14%, the ET reported on Monday.
A long-running shift in ownership
The numbers mark a dramatic reversal from May 2021, when FPIs owned 20% of Indian equities and mutual funds held barely 7%. Mutual funds' share stood at 11% as recently as January 2026.
FPI equity assets under custody fell to Rs 66.18 lakh crore in September — the lowest since March 2026 — against a record Rs 77.96 lakh crore in September 2024, when FPIs accounted for about 16.4% of the market. Mutual funds' equity assets, meanwhile, reached about Rs 55.14 lakh crore, up from roughly Rs 20 lakh crore in April 2022, with the industry's corpus crossing Rs 50 lakh crore in October 2025.
Samir Arora of Helios Capital Management said the trend reflected a normal market evolution: "In every market, normally local investors dominate and the same trend is emerging in India," adding that domestic institutions could own more of the market than foreign investors in the medium term. Ritesh Jain of Pinetree Macro said mutual funds, high-net-worth investors and family offices were likely to account for a growing share over time.
The milestone underscores how India's equity market is becoming increasingly driven by domestic money even as foreign investors keep pulling out — October alone has seen over Rs 44,000 crore in FPI selling.
Sources:
- The Economic Times (live blog): Mutual funds close in on FPIs in Indian equity ownership
- The Economic Times: Mutual funds close in on FPIs in Indian equity ownership
Mutual funds held a record 11.7% of Indian equities in September, while the FPI share slipped below 14%, the ET reported on Monday.
A long-running shift in ownership
The numbers mark a dramatic reversal from May 2021, when FPIs owned 20% of Indian equities and mutual funds held barely 7%. Mutual funds' share stood at 11% as recently as January 2026.
FPI equity assets under custody fell to Rs 66.18 lakh crore in September — the lowest since March 2026 — against a record Rs 77.96 lakh crore in September 2024, when FPIs accounted for about 16.4% of the market. Mutual funds' equity assets, meanwhile, reached about Rs 55.14 lakh crore, up from roughly Rs 20 lakh crore in April 2022, with the industry's corpus crossing Rs 50 lakh crore in October 2025.
Samir Arora of Helios Capital Management said the trend reflected a normal market evolution: "In every market, normally local investors dominate and the same trend is emerging in India," adding that domestic institutions could own more of the market than foreign investors in the medium term. Ritesh Jain of Pinetree Macro said mutual funds, high-net-worth investors and family offices were likely to account for a growing share over time.
The milestone underscores how India's equity market is becoming increasingly driven by domestic money even as foreign investors keep pulling out — October alone has seen over Rs 44,000 crore in FPI selling.
Sources:
- The Economic Times (live blog): Mutual funds close in on FPIs in Indian equity ownership
- The Economic Times: Mutual funds close in on FPIs in Indian equity ownership
