Nifty 500 Hits Record Low: Promoters Slash Stakes as DIIs and FIIs Adjust Sector Strategies; Reports Motilal Oswal

Promoter Holdings in Indian Markets Decline as Investors Eye Opportunities

Promoters of companies listed on Indian stock markets are steadily reducing their stakes, taking advantage of high valuations and strong investor demand, according to a report by Motilal Oswal Financial Services. The report noted that promoter holding in the Nifty 500 index fell to an all-time low of 48.8 percent in December 2025. Historically, promoter stakes have remained range-bound, but the report states that they “continued to decline materially to an all-time low of 48.8 percent (-90 basis points YoY, -50 basis points QoQ) in Dec’25.”

This sharp dip has been driven by a recovery in the primary market over the last three quarters. High valuations and robust investor appetite created an attractive opportunity for promoters to liquidate part of their holdings, unlocking value while retaining significant stakes in their companies.

DIIs Gain While FIIs and Retail Holdings See Mixed Trends

While promoters trimmed their stakes, domestic institutional investors (DIIs) increased their ownership significantly. Over the past year, DII holdings rose 210 basis points YoY and 60 basis points QoQ, reaching a record 20.6 percent in December 2025. In contrast, foreign institutional investors (FIIs) slightly decreased their stake, dipping 50 basis points YoY, although it rose 10 basis points sequentially to 18.4 percent from 18.9 percent in December 2024. Retail participation also declined, with holdings slipping to 12.1 percent (-60 basis points YoY, -20 basis points QoQ).

Within the Nifty 500 universe, DIIs and FIIs demonstrated divergent sectoral trends. On a year-on-year basis, DIIs raised their stakes in 22 out of 24 sectors. The largest DII increases were observed in EMS, Technology, Telecom, Retail, PSU Banks, and Healthcare, while Media and Logistics saw a reduction in holdings. Sequentially, the biggest DII gains occurred in NBFC – Non Lending, Private Banks, Capital Goods, NBFC – Lending, and Consumer sectors.

FIIs Show Selective Interest Across Sectors

Foreign investors, meanwhile, displayed a mixed strategy. FIIs increased their stakes both sequentially and annually in sectors such as PSU Banks, Telecom, Oil & Gas, Chemicals, NBFC – Lending, Insurance, and Metals. However, they reduced holdings in 15 sectors on a YoY basis, with notable reductions in EMS, Consumer Durables, Technology, Infrastructure, Retail, Private Banks, Utilities, Real Estate, and Consumer sectors.

The report emphasizes that these ownership shifts highlight evolving market dynamics. While promoters are capitalizing on favorable market conditions, domestic investors are increasing participation across sectors, and foreign investors are selectively realigning portfolios based on sectoral performance.

Changing Ownership Patterns Reflect Market Sentiment

Motilal Oswal’s report suggests that the shifting composition of shareholding underscores a changing Indian equity landscape, where high valuations, strong investor participation, and sectoral opportunities influence strategic decisions. Promoters’ stake reductions, coupled with DII gains, reflect confidence in domestic market growth and the evolving behavior of institutional and retail investors.

(This article has been syndicated from ANI)