Promoters Tighten Grip on NSE Stocks: Ownership Hits 7-Quarter High, FPI Holdings Plummet to 12-Year Low!

Promoter ownership in companies listed on the National Stock Exchange (NSE) rose for the fifth consecutive quarter during the first quarter (Q1) of FY25, reaching 51.5%. This is the highest level in seven quarters, with a 14 basis points (bps) increase from the previous quarter and an 80 bps rise in the first half of 2024.

Foreign Promoters and Government Holdings Increase

The increase in promoter ownership was largely driven by higher holdings from government and foreign promoters. However, this was partly offset by a decline in private Indian promoter ownership for the second straight quarter, according to NSE’s India Ownership Tracker report.

Foreign promoters raised their stakes in NSE-listed companies by 28 bps quarter-on-quarter (QoQ) to 8.3%. On the other hand, private Indian promoters saw their ownership drop by 33 bps QoQ, hitting an 18-quarter low of 32.4% in the June quarter. The decrease was mainly due to a reduction in holdings by non-individual private promoters, despite a 20 bps QoQ increase in shares held by individual promoters (including Hindu Undivided Families) to 6.5%.

Notably, individual promoters now make up 20% of the total private Indian promoter holdings in NSE-listed companies.

Government Ownership Reaches 30-Quarter High

Government ownership in NSE-listed companies, including both promoter and non-promoter shares, rose by 2.4 percentage points (pp) in FY23, mainly due to the listing of Life Insurance Corporation of India (LIC). This trend continued in FY24 with a further 2.8 pp increase, driven by the strong performance of public sector undertakings (PSUs).

In FY25, government ownership climbed by 27 bps QoQ (+127 bps in H1 2024) to a 30-quarter high of 11.5%. The Nifty PSE index’s 17.1% gain in the June quarter, compared to the 7.5% and 11.4% returns of the Nifty50 and Nifty500 indices, contributed to this rise.

Foreign Portfolio Investor (FPI) Holdings Hit 12-Year Low

FPI shareholding dropped for the fifth consecutive quarter, falling by 28 bps QoQ to a 12-year low of 17.6% as of June 30, 2024. This marked a 65 bps decline in the first half of 2024. Despite this, FPI portfolios grew by 11.4% QoQ, marking the fifth quarter of growth in a row, although at a slower pace than the 13.4% rise in the total market cap in the June quarter.

The decline in FPI holdings is partly due to significant foreign capital outflows, with net FPI outflows in the quarter amounting to $911 million, according to the NSE report.

After declining in the previous four quarters, FPI share in Financials saw a modest 14 bps QoQ increase to 24.5%. Excluding Financials, FPI share in NSE-listed companies fell by 35 bps QoQ to a 47-quarter low of 15.6%.

Mutual Funds Hit Record High

Domestic mutual funds’ share in NSE-listed companies reached a new record high of 9.2% in the June quarter, with a 25 bps QoQ increase. Domestic fund houses invested ₹1.3 lakh crore into Indian equities in Q1FY25, bringing total net inflows to ₹8.1 lakh crore since April 2022. This rise is partly due to increasing participation by individuals through the Systematic Investment Plan (SIP) route.

SIP inflows have steadily increased in recent years, with an average monthly inflow rising by 9.1% QoQ to ₹20,846 crore in the June quarter. Of the total domestic mutual funds’ share of 9.2%, passive funds held 1.7%, while active funds accounted for 7.5%, up 21 bps QoQ.

Other Key Trends

Meanwhile, the share of Banks, Financial Institutions, and Insurance companies in NSE-listed companies dropped for the fifth consecutive quarter to a two-year low of 5.4% in the June quarter, though this is still higher than the post-pandemic lows.

Individual investors’ share in NSE-listed companies rose slightly by 10 bps QoQ to 9.6% at the end of the June quarter, with net investments of ₹39,278 crore in the secondary markets during the quarter, following ₹52,568 crore in the previous quarter.