We report ultrafast transient-grating experiments on heavily p-type InP at 15 K. Our measurement reveals the dynamics and diffusion of photoexcited electrons and holes as a function of their density n in the range 2E16 to 6E17 cm-3. After the first few picoseconds the grating decays primarily due to ambipolar diffusion. While at low density we observe a regime in which the ambipolar diffusion is electron-dominated and increases rapidly with n, at high n it appears to saturate at 34 cm2/s. We present a simple calculation that reproduces the main results of our measurements as well as of previously published measurements that had shown diffusion to be a flat or decreasing function of n. By accounting for effect of density on charge susceptibility we show that, in p-type semiconductors, the regime we observe of increasing ambipolar diffusion is unique to heavy doping and low temperature, where both the holes and electrons are degenerate; in this regime the electronic and ambipolar diffusion are nearly equal. The saturation is identified as a crossover to ambipolar diffusion dominated by the majority carriers, the holes. At short times the transient-grating signal rises gradually. This rise reveals cooling of hot electrons and, at high photocarrier density, allows us to measure ambipolar diffusion of 110 cm2/s in the hot-carrier regime.