Rs 12.6 Lakh Crore Equity Wealth Wiped Out As Domestic Investors Cushion Market
Last Updated:
Indian households lost Rs 12.6 lakh crore equity wealth in March 2026, but strong SIP and mutual fund inflows let domestic institutions offset heavy FPI selling
Domestic Investors Replace FPIs As India’s Biggest Market Support
Indian households suffered one of their sharpest quarterly wealth erosions in recent years during the March 2026 quarter, even as steady domestic inflows helped prevent a deeper correction in Indian equities.
Indian households lost nearly Rs 12.6 lakh crore in equity wealth during the March quarter of FY26, according to the latest NSE Market Pulse report. The decline came amid rising global uncertainty, elevated crude oil prices linked to geopolitical tensions, and weakness in the rupee, all of which weighed heavily on stock valuations.
Despite the steep fall, the data also highlighted a major structural change in Indian markets. Domestic investors, particularly through systematic investment plans (SIPs) and mutual funds, emerged as the key stabilising force during a period of aggressive foreign selling.
Domestic Institutions Step In
While foreign investors exited, domestic institutional investors absorbed a significant portion of the selling pressure. Mutual funds, insurers, and banks together now own around 19.6% of NSE-listed companies, staying ahead of FPIs for six consecutive quarters.
Domestic mutual funds increased their shareholding to a record 11.4%, supported by monthly SIP inflows averaging between Rs 29,000 crore and Rs 31,000 crore during FY26.
The report said domestic institutions absorbed nearly five times the amount sold by FPIs during the year, underlining the growing importance of retail-driven investments in supporting market stability.
Foreign Investors Continue Heavy Selling
Foreign portfolio investors (FPIs) remained persistent sellers throughout FY26, pulling out nearly US$19.6 billion from Indian equities during the financial year. Their ownership in NSE-listed companies dropped to around 15.8%, the lowest level in 17 years. Nearly three-fourths of the outflows occurred during the March quarter alone.
The report noted that FPI holdings declined nearly 18% in value terms during the quarter, reducing foreign investors’ influence in Indian markets to levels last seen before the 2008 global financial crisis.
Retail Investors Hold Larger Share Of Market
Direct retail ownership slipped to around 9.1%, a five-year low, as many traders reduced exposure during the selloff. However, when mutual fund investments are included, Indian households now control roughly 18.7% of the market, exceeding FPI ownership levels.
Combined household equity wealth still stands at approximately Rs 76.5 lakh crore, up nearly Rs 44 lakh crore since April 2020 despite the recent correction. Analysts say the shift reflects how India’s capital markets are increasingly being driven by domestic savings rather than foreign capital.
Read More
