Market Dynamics Shift as Indian Company Promoters Reduce Stakes

A significant trend is emerging in the Indian stock markets as promoters of listed companies steadily reduce their stakes. According to a report by Motilal Oswal Financial Services, this activity is driven by high valuations and strong investor interest, which provided an opening for liquidation at elevated prices. As a result, promoter holding in the Nifty 500 declined to a record low of 48.8% in December 2025.

The report notes that promoter holdings, traditionally stable, experienced a marked decline to an all-time low, shedding 90 basis points year-on-year and 50 basis points quarter-on-quarter by December 2025. This drop aligns with a revival in the primary market over the past three quarters, fueled by high valuations and robust investor demand, prompting many promoters to pare their stakes.

Conversely, domestic institutional investors (DIIs) increased their ownership, climbing 210 basis points year-on-year and 60 basis points quarter-on-quarter to a record high of 20.6% in December 2025. Meanwhile, foreign institutional investor (FII) ownership saw a decrease of 50 basis points year-on-year, despite a modest sequential rise, reaching 18.4% in December 2025.