DII holdings change

What is DII Holdings?

Domestic Institutional Investors (DII) holdings refer to the percentage share of holdings that DIIs have in the financial assets of their home country. DIIs invest and have shareholdings in companies and assets of their domestic country through various financial instruments such as stocks, bonds, real estate and other financial assets.

What is DII Holding Change?

Domestic Institutional Investors (DIIs) holding change means the percentage or absolute change in their holdings in domestic financial assets. DII holding change is represented primarily as a percentage change in their quarterly holdings.

How does DII Holding Change Impacts Share Markets?

Domestic Institutional Investors (DIIs) hold a prominent position in the Indian stock markets. Due to their large amount and frequency of investments, DIIs holding changes impact market sentiment and trends to a great extent.

Typically, DIIs hold their investments for longer time frames than FIIs, which influences the liquidity in the markets. Along with it, the DII holding change impacts the share price and overall sentiment accordingly. For example, when DIIs initiate selling stocks, the market experiences a bearish trend, and on the other hand, when DIIs start the buying activity, the stock market faces a bullish trend.

• Domestic holding change significantly influences the Indian stock market.
• Buying and selling by Domestic Institutional Investors (DIIs) brings a corresponding bullish and bearish trend in the stock market.

Who are Domestic Institutional Investors (DII)?

Domestic Institutional Investors (DIIs) are those domestic institutions that invest in financial assets and securities of companies that are headquartered in their home country.

DIIs include mutual funds, insurance companies, hedge funds and other domestic institutions that raise capital from shareholders and wealthy investors. Further, this capital is invested in distinct financial securities and assets while following a specific investment objective, strategy and risk tolerance.

For example, let us assume that an insurance company is headquartered in  India. The name of the insurance company is ABC Ltd. This company now invest its funds in securities of the public companies listed on the Indian stock exchanges. In such a scenario, ABC Ltd. is a domestic institutional investor (DII) because it is an Indian institution that invest in other Indian securities.

• Domestic Institutional Investors (DIIs) are organisations that invest in financial instruments and assets in their home countries. 
• In India, DIIs include mutual funds, insurance companies, pension funds and banks.

Types of DIIs in India

The following are the major categories of DIIs in India:

1. Indian Mutual Funds - Mutual funds are companies that are engaged in the creation and management of portfolios. These funds consist of various financial securities and assets that are selected and managed by skilled fund managers. Retail investors and others invest extensively in these mutual funds to get exposure to a wide range of instruments and assets while taking limited risks.
   Mutual funds are prominent players in the DII universe in the Indian markets, and they invest with the objective of creating a diversified and wealth-generating portfolio for their investors.
2. Indian Insurance Companies - Insurance companies are organisations that provide insurance policies to their customers in return for policy premiums. These companies offer various types of policies, including life insurance, health insurance, motor insurance, house insurance and many more. The recipients of these insurance policies pay a policy premium as a fee for the security or insurance they receive. Insurance companies also operate as DIIs by deploying the premium into a vast set of assets to generate income for funding their daily operations and to create a corpus of funds that can be used to pay back the customers at maturity.
3. Banking Institutions - This category of domestic institutional investors (DIIs) primarily includes banks and asset management companies (AMCs). Asset management companies are financial institutions involved in the asset management business for wealthy individuals and corporations. Banks form the core of the Indian economy and are engaged in the business of accepting deposits and distributions of loans and advances. Both these institutions actively participate in the market as DIIs and use their pooled capital to generate returns from investment in domestic securities and assets.
4. Pension Funds - Pension Funds like the National Pension Schemes (NPS) and Public Provident Funds help employees and individuals create a fund for safe and secure retirement.

Difference Between Domestic Institutional and Foreign Institutional Investors?

The core differentiators between the FIIs and DIIs are as follows:

1. Domestic institutional investors (DIIs) invest in the companies and assets of their home country, whereas foreign institutional investors (FIIs) invest in foreign companies' securities.
2. FIIs usually invest for a short to mid-term, and DIIs invest for a longer time frame.
3. DIIs face fewer regulations than FIIs in India.
4. DIIs have a share of approximately 14% of the total Nifty 500 companies, which is lower than the 21% share of FIIs.

Key Takeaways On DIIs

• Domestic Institutional Investors (DIIs) refer to those institutions that are based in India and invest in financial assets and securities of Indian companies.
• DII holdings is a term that reflects the shareholdings of DIIs in an Indian company.
• DII holding change represents the percentage change in the shareholdings of the Domestic Institutional Investors (DIIs).
• Banks, insurance companies, pension funds and mutual funds form the major portion of the DII segment in India.