FPIs hit the sell button again: Rs 3.12 lakh crore exits Indian equities in 2026

NEW DELHI: Foreign investors have pulled Rs 52,100 crore out of Indian equities in October so far, taking their total withdrawals from the market in 2026 to Rs 3.12 lakh crore.

The latest round of selling comes amid high crude oil prices, rising US bond yields and a stronger dollar, which have dampened investor sentiment towards domestic stocks.

Data from the Central Depository Services Ltd (CDSL) showed that the October outflow followed withdrawals of Rs 35,861 crore in September.

This marked a reversal from July and August, when foreign portfolio investors (FPIs) brought Rs 20,200 crore and Rs 29,631 crore, respectively, into Indian equities.

The scale of selling this year has already far exceeded the withdrawals recorded in 2025. FPIs took out Rs 1.66 lakh crore from Indian equities during the whole of last year, compared with Rs 3.12 lakh crore so far in 2026, according to the data.

Dheeraj Gaur, chief investment strategy officer at Choice Wealth, attributed the continued selling to elevated US bond yields, the stronger dollar and rising crude oil prices.

Persistent US inflation has also raised expectations of a Federal Reserve rate hike, increasing the appeal of US assets for foreign investors, he said.

India is facing additional pressure from expensive crude oil, while the artificial intelligence-led rally in North Asian markets is attracting foreign money away from domestic equities, Gaur added.

Brief buying offers little indication of a trend reversal

Foreign investors made a marginal return to buying on October 16, but the shift may be tactical rather than evidence of a lasting improvement in their outlook for Indian equities.

V K Vijayakumar, chief investment strategist at Geojit Investments Ltd, pointed to two factors behind the temporary change: the US 10-year bond yield easing marginally from above 5.3 per cent to 5.08 per cent, and the rupee strengthening against the dollar.

FPI activity also differed across sectors. Financial services and oil-related stocks continued to face selling pressure, whereas consumer services attracted foreign investment.

This included digital platform companies, entertainment, restaurants and healthcare services, Vijayakumar said.

Pabitro Mukherjee, deputy vice president-Research at Bajaj Broking, said the slowdown in FPI selling and the reversal in flows on Friday suggested that investor sentiment was stabilising.

He cautioned, however, that high crude oil prices remained a risk to a potential recovery.

Brent crude prices and developments in US-Iran relations will be among the key factors investors track in the coming period.

In India, the focus will also be on second-quarter earnings for FY27, Mukherjee said.

Foreign investors' selling extended to the debt market in September, although flows varied across investment routes.

They withdrew Rs 1,620 crore through the Fully Accessible Route (FAR) and Rs 772 crore through the Voluntary Retention Route (VRR).

In contrast, the general route saw investments of Rs 3,387 crore.