Domestic Institutional Holding is calculated as shares held by institutional investors based in India divided by the total shares outstanding of the company. DII (Domestic Institutional Investor) refers to large financial institutions like mutual funds, pension funds, insurance companies, endowment funds etc, which are based in India. Examples of DIIs are Life Insurance Corporation of India and HDFC Mutual Fund.
DIIs conduct extensive research about the prospects of the company & related sector, perform due diligence about capabilities of the management & corporate governance as well as other related factors before investing in a company. Generally, once DIIs decide to invest in a company, they hold onto the shares of the company for a long period of time. A high DII stake in a company is considered to be an endorsement about the company’s prospects.