The share of institutional investors in Nifty 50 stocks fell to a record low of 56.1% in the first quarter of FY27, declining by 3.1 percentage points from the previous quarter, according to the NSE Market Pulse report for August. The decline in institutional allocation to Nifty 50 stocks has reached 4.8 percentage points in the first half of 2026. The current allocation is also 16.3 percentage points below the pre-pandemic peak of 72.4% recorded in December 2019. As per the NSE report, institutional allocation shifted further away from Nifty 50 to mid- and small-cap stocks, highlighting a continued shift in institutional investment beyond large-cap stocks.
Individual investors also reduced their allocation to Nifty 50 stocks during the quarter, with their allocation falling by 3.1 percentage points from the previous quarter to a record low of 33.4%. This shift was visible across different market capitalisation groups, with domestic mutual fund allocation to the largest group of stocks falling by 4.3 percentage points quarter-on-quarter to 83.5%. Foreign portfolio investors (FPIs) similarly reduced their allocation to the largest group of stocks by around 3 percentage points to a six-year low of 89%. Individual investors similarly reduced their exposure to the largest companies, while their allocation increased across other groups of stocks, as reported by ANI.
According to the NSE report, the decline highlights a continued shift in institutional investment beyond large-cap stocks, with institutional allocation shifting further away from Nifty 50 to mid- and small-cap stocks. Individual investors similarly reduced their exposure to the largest companies, while their allocation increased across other groups of stocks. This indicates a renewed shift towards mid-cap, small-cap and micro-cap stocks during the quarter, as reported by The Hindu BusinessLine. The trend shows that FPIs are now investing in a much wider set of companies, while larger ownership stakes continue to remain concentrated in a relatively smaller part of their overall portfolio.
The report highlighted a broader change in institutional ownership since the pandemic, with institutional investors spreading their investments across a larger number of listed companies. The number of NSE-listed companies with FPI ownership increased from around 1,200 in December 2020 to more than 1,450 by the end of 2021 and over 1,770 by the end of 2022. FPI coverage then temporarily declined to around 1,450 companies in the fourth quarter of FY23, but subsequently resumed its upward trend and now exceeds 2,000 companies, according to ANI.
