How Are Domestic Institutional Investors Supporting Indian Markets?
Click to start listening
Synopsis
In 2025, Indian domestic institutional investors showcased remarkable resilience with a substantial increase in assets, demonstrating robust support for local equity and debt markets, even as foreign investments dwindled. This article delves into the key figures and trends shaping this landscape.
Key Takeaways
- Domestic institutional investors showed strong growth in 2025.
- Mutual funds led the way with a 20.6 percent increase in assets.
- Insurance and pension funds also experienced significant growth.
- AIFs and banks saw a notable surge in equity assets.
- Foreign investments remained subdued, reflecting market challenges.
New Delhi, Jan 7 (NationPress) The leading domestic institutional investors in India experienced a remarkable increase in their assets, ranging from 12 percent to 20 percent in various sectors throughout 2025. This trend highlights the ongoing local backing for both equity and debt markets, even as the growth of foreign investor assets has diminished.
Leading this growth, mutual funds saw a significant increase in their equity assets, which rose by 20.6 percent to reach Rs 52.25 lakh crore, up from Rs 43.34 lakh crore the previous year. The total of their equity and debt assets climbed by 23.34 percent to Rs 73.21 lakh crore, compared to Rs 59.35 lakh crore, according to available data.
During 2025, mutual funds acquired approximately Rs 4.88 lakh crore worth of Indian equities, compared to Rs 4.3 lakh crore the year before, as indicated by the data.
Other institutional players like insurance companies and domestic pension funds also witnessed growth in their equity assets, with insurance companies seeing a 12.6 percent rise to Rs 26.81 lakh crore, and pension funds experiencing a staggering 66 percent increase to Rs 4.38 lakh crore. Together, they purchased over Rs 1.4 lakh crore in Indian equities throughout the year.
The combined equity and debt assets of these institutions rose by 12 percent and 20 percent respectively, reaching Rs 45.89 lakh crore and Rs 16.32 lakh crore, driven by sustained investments and regulatory adaptability. The pension regulator approved higher equity limits for tier 2 and 3 assets, while the insurance regulator allowed controlled equity allocations within set limits.
Meanwhile, alternate investment funds (AIFs) and banks saw their equity assets soar by 37 percent and 33 percent respectively, with their combined equity and debt assets increasing by 23 percent and 25 percent.
Analysts noted that the expanding asset base of AIFs in India suggests that high-net-worth investors and family offices are employing targeted, rules-based strategies to achieve superior returns.
In contrast, foreign portfolio investors reported only a 4.3 percent increase in their equity allocations for the year, bringing them to Rs 74.26 lakh crore. Their total equity and debt exposure grew merely 4.8 percent to Rs 81.4 lakh crore. In 2025, foreign institutional investors (FIIs) net sold Rs 1.66 lakh crore due to stretched valuations, escalating geopolitical worries, and increased tariffs on Indian products.
aar/na
Point of View
It's crucial to recognize the pivotal role domestic institutional investors play in supporting India's financial ecosystem. Their continued investment amidst fluctuating foreign interest underlines a resilient market. This trend not only reflects confidence in the local economy but also highlights an evolving landscape where domestic players are increasingly influential.
NationPress
10/01/2026
Frequently Asked Questions
What percentage increase did mutual fund assets see in 2025?
Mutual fund assets increased by 20.6 percent in 2025.
How much did domestic pension funds grow in equity assets?
Domestic pension funds experienced a remarkable 66 percent increase in equity assets.
What factors contributed to the growth of domestic institutional investors?
The growth was driven by continued investments, regulatory flexibility, and higher equity limits approved by regulators.
What is the status of foreign portfolio investments in India?
Foreign portfolio investors saw only a 4.3 percent increase in equity allocations, indicating a shift in investment dynamics.
What does the rise in AIFs indicate about investor behavior?
The rise in AIFs suggests that high-net-worth investors are employing focused, rules-based strategies for better performance.
