In a remarkable shift for Indian capital markets, 2025 has marked the year when domestic investors , fuelled by a surge in retail participation, systematic
investment plans (SIPs), and a record explosion in demat accounts , have outstripped foreign institutional investors (FIIs) in ownership of NSE-listed companies. The transformation has been nothing short of historic. As of June 2025, Domestic Institutional Investors (DIIs) held a record 17.82% stake in NSE-listed firms, surpassing FIIs, whose ownership dropped to a 13-year low of 17.04%. Within DIIs, mutual funds alone hold 10.56%, their highest-ever share. When combined with holdings of retail and high-net-worth individuals (HNIs), domestic investors now control 27.40% of the market , sharply reducing the once-dominant foreign grip on Dalal Street. Pranav Haldea, Managing Director of PRIME Database Group, observed, “Indian markets shall continue their steadfast march towards even more atmanirbharta (self-reliance) in the quarters and years to follow. The day is not too far when the share of MFs alone shall overtake that of FIIs.”
The Demat Detonation
The backbone of this power shift is the massive rise in investor participation. From 4.1 crore demat accounts in March 2020, the number has surged fivefold to over 20 crore by June 2025. What took 23 years to achieve in account growth was replicated four times over in just five years.
A large chunk of this boom is driven by under-30 investors. Data from brokers show that India now has about 4.8 crore “active clients”, those who trade at least once a year. Unique investor counts, based on PAN, are estimated at under 10 crore, but still represent a seismic expansion for a market that long depended on a narrow base.
According to Dr. Poonam Tandon, CIO at IndiaFirst Life Insurance, “The onset of the COVID-19 pandemic in March 2020, which initially triggered a steep market correction, became a catalyst for change as millions of new demat accounts were opened across the country.”
The SIP Tsunami
Alongside the demat boom, mutual fund SIPs have turned disciplined investing into a mainstream habit. Annual SIP contributions nearly tripled from Rs 1,00,084 crore in FY20 to Rs 2,89,352 crore in FY25. The mutual fund industry’s assets under management (AUM) have surged from Rs 22.26 lakh crore in March 2020 to an all-time high of Rs 65.74 lakh crore in March 2025.
AMFI CEO Venkat N. Chalasani attributes this to a behavioural shift, “The consistent rise in SIP accounts and a detailed analysis of investment trends indicate a growing preference among investors for disciplined, long-term investing over short-term speculation.”
Individual investors, including HNIs, retail, and NRIs, now hold 63.2% of mutual fund AUM, making these vehicles the primary domestic defence against volatile foreign flows.
A Strategic Shift in Market Power
For decades, FIIs were the largest non-promoter shareholders in India, with their buying and selling often dictating market sentiment. But the tide has turned. Domestic inflows, particularly from SIPs, now provide a stabilising counterweight, reducing India’s dependence on fickle global capital.While FIIs remain an important participant, their stranglehold over Indian equity markets has eased considerably. This new financial independence ensures that India’s stock market is less vulnerable to sudden capital flight triggered by overseas events.
As the country celebrates Independence Day 2025, the stock market’s shift towards domestic control is being seen as a form of financial independence , one that reflects growing confidence in India’s economic potential and the increasing participation of its own citizens in wealth creation.
