Domestic mutual funds’ holding in NSE-listed companies has surpassed ownership of individual investors for the first time to an all-time high, as flows into systematic investment plans remain steady amid selling in mid- and small-caps by the direct retail category.
Mutual funds’ share as a percentage of the total market capitalization of the companies listed on the National Stock Exchange (NSE) stood at a record high 10.4% in the quarter ended March 2025, surpassing the 9.5% share of individual investors who trade directly, according to NSE’s India Ownership Tracker report.
Record inflows
These funds infused ₹1.9 trillion into equities in Q4 of FY25, taking total net inflows to ₹6.1 trillion for the year, the highest for any fiscal to date.
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“In value terms, DMF (domestic mutual fund) holdings stood at ₹42.4 trillion, down just 2.4% QoQ, despite a larger drop in the overall market cap, reflecting sustained net equity purchases,” the report said, adding that the strong momentum was “driven in part” by continued retail participation through systematic investment plans (SIPs).
Individual holding in NSE-listed companies declined by 30 basis points sequentially to a seven-quarter low of 9.5% in January-March, led by reduced share in mid- and small-cap companies–a segment that saw aggressive buying by individuals over the past few years, according to the report.
“In value terms, individual holding in NSE-listed companies fell by 9.2% QoQ to ₹38.9 trillion—exceeding the overall drop in market cap—indicating subdued retail activity and elevated market volatility and uncertainty,” the tracker showed.
Market veterans expect the trend to continue, given that individuals trading directly tend to use the mutual fund route after encountering losses in their investments.
“We have seen market volatility between October last year and 7 April, which has singed direct retail,” said B Gopkumar, managing director and chief executive officer at Axis Mutual Fund. “This trend in holding will weigh in favour of mutual funds as some individual investors who have been hit by losses in any cycle tend to return through the MF route.”
Mutual fund inflows are expected to remain buoyant, said analysts.
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“With the investment environment turning more favourable, mutual fund flows are likely to gain further strength,” said Nirav Karkera, head of research at wealth-tech platform Fisdom. “Positive equity outlook and a gradually emerging risk-on sentiment are expected to drive continued interest from retail investors.”
The total market cap of the listed universe fell to ₹408.9 trillion as of March from ₹436.6 trillion as of December.