Individual direct ownership of NSE-listed companies fell to a five-year low of 9.1% in the fourth quarter of FY26, according to NSE's Market Pulse data. This represents the lowest level since FY21, when ownership stood at 9% of ₹18.27 trillion market capitalization. The current ownership of ₹37.4 trillion is based on the total market capitalization of ₹408.6 trillion of over 2,700 listed companies, marking a 66 basis points decline from the post-COVID peak of 9.8% recorded in December 2024.
The decline was attributed to negative returns over the past 18 months due to tepid earnings growth and the West Asia war, which caused a ₹5,803 crore net sell-off following six years of net inflows worth ₹4.59 trillion. As reported by NSE data, the Nifty declined 13.5% over the past 18 months to 23,331.4 by March end, while the Nifty Midcap 150 was down 13% at 19,431 and the Nifty Midcap 250 plunged 22% to 14,288.
Despite the decline in direct ownership, domestic mutual funds recorded their eleventh consecutive quarter of rising ownership, hitting a fresh high of 11.4% of NSE-listed market capitalization. According to market experts, the rising cult of market access through mutual funds and exchange-traded funds contributed to the decline in direct investing. Ishan Bansal from Groww noted that the acquisition funnel has shifted more towards mutual funds and ETFs since September 2024, with SIP being one of the largest modes of assets under management.
The Nifty recovered 7% from the end of March to Wednesday's close of 23,907.15 amid rising hopes of West Asia war resolution. The Nifty Midcap 150 and Nifty Smallcap 250 outperformed significantly, rallying 18% and 20% respectively from March end through Wednesday's close. However, independent market analyst Ambareesh Baliga warned that until a durable peace deal is sealed, markets are likely to remain volatile, impacting direct individual participation.
The Nifty 50 posted year-on-year operating profit growth of 6.3% and 6.7% in FY26 quarters ended September and December, down from 9.4% and 10.5% in the year-ago quarters. According to Baliga, earnings could be impacted for a few more quarters due to war-induced elevated oil prices, with Brent crude up 28% since the war began through Thursday's close at $92.69 per barrel. Despite current challenges, combined individual ownership including mutual funds stands at 18.7%, comfortably outpacing foreign portfolio investors' 15.8% stake for the sixth straight quarter.
