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DII: The power players of India’s economy

In the stock market, not everyone is just a regular person buying or selling a few shares. There are big players in the background, trading large amounts. They are called Institutional Investors. Keep reading to learn more about them. 

Understanding institutional investors 

Institutional Investors are large organisations that manage and invest pooled funds from many sources, like individuals or other firms, to invest in the market. Their investment decisions create a major impact and influence in the stock market.

Institutional investments come in two types: Foreign Portfolio Investors (FPI) or Foreign institutional investors (FII). Next, DII full form – Domestic Institutional Investors from within the country.

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What is DII in share market?

Domestic institutional investors are institutions that invest within the country. In India, they are essentially institutions like banks, insurance companies, and mutual funds investing their pooled funds in domestic securities.

Their investment choices can significantly move the market. Factors like economic stability and political decisions guide DIIs.

As of March 31, 2015, FPIs were far ahead in equity market holdings by 55.45%. However, the lead shrank; now, as of August 2023, the net value for DIIs amounts to  ₹.16,327.50 crores, while FII figures are at a contrasting ₹.-15,821.13 crores. This shift emphasises the growing confidence of Indian institutions in the domestic market.

DII in share market

This increasing involvement indicates a positive view of the Indian market’s potential. When these major entities invest confidently at home, it’s worth noting for all investors.

Top 10 DII positions by percentage of holdings 

Top 10 DII positions by percentage of holdings

Also read: What is book value? How is it calculated?

Role of DII in share market

  • Domestic institutional investors fund capital for top businesses in the country and ensure a smooth flow of stock trading in the market.
  • As it involves a vast amount of funds, they have a big say in how stock prices change.
  • Their considerable investments drive them to closely monitor assets and advocate for better business management practices.

Also read: FII vs DII

How can retail investors benefit?

For the individual or retail investor, watching the actions of DIIs can be beneficial. Platforms like the National Stock Exchange (NSE) provide insights into DII and FPI activities. 

By observing where these major institutions are investing, retail investors can glean hints about potential market movements. Given the challenge of comprehending every detail about a company, tracking DII investment trends offers a simplified way to gauge a stock’s potential future performance.

Types of DIIs 

Indian mutual funds:

Mutual funds pool money from several investors to buy a diverse range of securities.  As of July 31, 2023, the Indian mutual fund had Assets Under Management (AUM) amounting to ₹. 46,37,565 crore. By investing in mutual funds, individuals can indirectly become a part of the DII landscape.

Indian insurance companies:

The insurance companies in India now manage assets exceeding ₹.60 trillion.  Among these, LIC stands out prominently, holding a dominant ₹. 10 lakh crore. 

Apart from insurance solutions, they provide financial options such as loans. Additionally, they offer specific financial products like Unit Linked Insurance Plans (ULIPs), which combine insurance coverage with investment opportunities in the stock market.

Pension funds

Pension schemes aim to offer a comfortable retirement. Government-led schemes like the National Pension Scheme (NPS) and the Employees’ Provident Fund (EPF) contribute substantially to DIIs. Pension funds are built from contributions made to pension plans by both employees and employers.

Banking & financial institutions

Banks, the very entities we trust with our savings, are also influential DIIs. And though they might not have made significant waves since 2020, there’s been a notable rise in bank assets across various sectors. In the quarter ending in June 2023, the banking held assets worth ₹.191.6 lakh crore

Note that each category of DII mentioned charges a fee for managing investments. They either collect asset management fees or take a portion of the profits from successful investments.

In a nutshell

Domestic institutional investors hold a pivotal role in the Indian stock market. With their investments across various sectors, they greatly influence the market’s direction. 

For individual investors in India, watching the moves of DIIs and understanding their actions can be beneficial for all market participants. Their growing interest in the local market signals a positive outlook for India’s financial future.


What is the difference between a FII and a DII?

Investors from outside India who make investments in the Indian stock market are referred to as Foreign Institutional Investors, or FIIs for short. Conversely, domestic investors who make investments in the Indian stock market are known as DIIs or Domestic Institutional Investors.

Who is the biggest DII in India?

The DII data helps determine the overall sentiment of domestic investors towards the nation’s economy and provides information on the level of domestic investment in the stock market. In India, the largest DII is the LIC.

What is the example of an institutional investor?

A business or organisation that manages investments on behalf of customers or members is known as an institutional investor. Examples of institutional investors include endowments, mutual funds, and hedge funds. Compared to regular investors, institutional investors are seen to be more savvy and often face less oversight from regulators.

What are the benefits of FII?

One of the most important advantages is an increase in cash inflow, which may be beneficial to the economy. To draw in foreign institutional investors, governments throughout the world often launch campaigns and advertisements. The local currency is related to investment inflows as well.

Who controls FII in India?

SEBI, which stands for the Securities and Exchange Board of India, is the principal regulatory entity that governs foreign institutional investors (FII) in the Indian stock market. The nation’s securities markets are subject to its oversight and it is responsible for their regulation.

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