For every β‚Ή100 withdrawn by foreign investors from Indian stock markets this year, domestic investors have withdrawn β‚Ή89

For every β‚Ή100 withdrawn by foreign investors from Indian stock markets this year, domestic investors have withdrawn β‚Ή89

India has seen an unprecedented sell-off by foreign investors this year. Still, Indian equity markets have maintained strong performances compared to most of their major peers around the world – all thanks to domestic investors.

Domestic investors were so strong in 2022 that they almost completely made up for the money pulled out by foreign investors.

It’s not just a blip either – a Morgan Stanley report found that since 2015, foreign investors’ holdings in 75 Indian companies have declined by 230 basis points to 24.8%, while mutual funds and individual investors have collectively increased their holdings by 737 basis points to 18.5%.

Here’s a look at how Indian stock markets have fared compared to their global counterparts:

Index YTD performance
Nifty50 1.6%
Sensex 1.4%
FTSE 100 -3%
Nikkei 225 -4.9%
Dow Jones -14.9%
S&P 500 -17.7%
DAX -18.7%
Nasdaq -26%

Note: As of September 15, 2022


According to the data, while foreign investors have pulled out over β‚Ή2.6 crore from the equity markets in 2022 till date, domestic investors have put in over β‚Ή2.32 crore.

Essentially, for every β‚Ή100 withdrawn by foreign investors, domestic investors plowed back nearly β‚Ή89.

Foreign investors versus domestic investors in 2022Business Insider India / Flourish

Several factors explain how strong domestic investor momentum has been over the past two years.

Here are a few reasons:

Three new demat accounts every four seconds from 2020

First, the number of demat accounts has exploded – more demat accounts have been opened in the last three years than in the last two decades.

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At the end of 2019, there were slightly less than 40 million demat accounts. Then the Covid-19 pandemic hit – people were trapped in their homes and there were very few options for investing, people flocked to the stock markets.

As a result, more than 60 million demat accounts were opened between January 2020 and August 2022 – an average of just under 2 million new accounts every month or three new demat accounts every four seconds.

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Indian equity markets have outperformed their global counterparts despite an unprecedented sell-off by foreign investors in 2022. Since the start of 2022, foreign investors have withdrawn more than β‚Ή2.6 lakh crore from Indian markets. Despite this, Indian equity markets have remained resilient, and the credit goes to domestic investors. India has seen an unprecedented sell-off by foreign investors this year. Still, Indian equity markets have maintained strong performances compared to most of their major peers around the world – all thanks to domestic investors.

SIPs have reached an all-time high – and are only growing


Indians have adopted mutual funds and systematic investment plans (SIPs) in record numbers – mutual fund accounts stood at 57.2 million at the end of August 2022, according to AMFI data.

For every β‚Ή100 withdrawn by foreign investors from Indian stock markets this year, domestic investors have withdrawn β‚Ή89
Monthly SIP flows from 2018 to August 2022Business Insider India / Flourish

But what’s even more interesting is the volume of SIPs – after first touching β‚Ή10,000 crore per month in September 2021, Indian investors have never looked back, with the average SIP per month now 63% higher than in 2018.

For every β‚Ή100 withdrawn by foreign investors from Indian stock markets this year, domestic investors have withdrawn β‚Ή89
Average monthly SIP and total SIP from 2018 to August 2022Business Insider India / Flourish

This is also reflected in the assets under management (AUM) of the Indian mutual fund industry – AUM stood at β‚Ή 39.53 crore in August 2022, according to AMFI.

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This is more than 5x the 2012 AUM of β‚Ή7.53 crore.

The AUM of Indian mutual funds stood at β‚Ή 30 crore in November 2020, and it took the industry 22 months to add another nearly β‚Ή 10 crore to its kitty.

Indians are starting to invest faster than ever before and this is now reflected in the stock markets and mutual funds in a big way.

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