Domestic institutional investors (DIIs) may have remained consistent net buyers in the equity markets through FY26, but a closer look at portfolio activity suggests a more cautious undertone beneath the surface. Even as liquidity from mutual funds and insurance players continued to support markets, DIIs selectively pared holdings in several high-profile stocks, signalling profit booking and rising discomfort with valuations in certain pockets.
Among the most notable stake reductions was in Hitachi Energy India, where DII ownership fell sharply from around 12.3 per cent at the start of FY26 to 6.9 per cent by the end of the year. The steep cut comes after the stock delivered a strong rally of about 125 per cent over the past year, pushing valuations significantly above historical averages. With the stock trading at more than double its five-year valuation multiple, the exit appears to reflect a classic case of profit-taking amid elevated valuations and limited near-term upside expectations.
A similar trend was visible in Cummins India, where DIIs trimmed their stake by roughly 3.4 per cent over the year. The stock nearly doubled in value during FY26 and saw a sharp re-rating in valuations, rising well above its long-term averages. Street expectations currently point to modest downside, indicating that institutional investors may have opted to lock in gains after the strong run-up. In Hero MotoCorp, stake reduction was relatively moderate at about 3.2 per cent, with valuations largely stable; here, the selling appears more tactical rather than driven purely by valuation excess.
On the volume front in equity ownership, data from exchanges showed foreign portfolio investors continued their heavy selling streak, pulling out Rs 8,437.56 crore from Indian equities on May 11, 2026, as per exchange data. FPI sell orders worth Rs 21,251.30 crore far exceeded their purchases of Rs 12,813.74 crore, marking a sharp net outflow that has added to the sustained pressure on the markets.
In contrast, domestic institutional investors stepped in as stabilising buyers, recording a strong net inflow of Rs 5,939.65 crore on the same day, with total purchases of Rs 21,626.43 crore against sales of Rs 15,686.78 crore. Notably, the persistent FPI withdrawal amid global uncertainty has been a key factor amplifying volatility and deepening.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
