Foreign portfolio investors (FPIs) have pulled out a substantial Rs 52,100 crore from Indian equities in October, driven by global economic uncertainties. The withdrawal comes amid rising crude oil prices, elevated US bond yields, and a stronger dollar, all of which have dampened investor sentiment.
This latest outflow follows a net withdrawal of Rs 35,861 crore in September. In contrast, FPIs had invested Rs 20,200 crore in July and Rs 29,631 crore in August, according to the Central Depository Services Ltd (CDSL). The cumulative FPI outflow from Indian equities in 2026 now stands at Rs 3.12 lakh crore, significantly surpassing the Rs 1.66 lakh crore withdrawn throughout 2025.
Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, noted that FPIs continue to offload Indian equities due to the allure of US assets, which have become more attractive amid expectations of a Federal Reserve rate hike. The persistent US inflation is a key factor behind these expectations. Additionally, the AI-driven rally in North Asian markets is diverting funds away from India.
Despite the prevailing trend, foreign investors briefly turned buyers on October 16. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, attributed this temporary shift to a slight decline in the US 10-year bond yield, which fell from over 5.3% to 5.08%, and the strengthening of the rupee against the dollar. However, this change is seen as tactical rather than a fundamental shift in sentiment.
Sectoral Trends and Future Outlook
FPIs have shown a varied approach across sectors. They continued to sell shares in financial services and oil-related companies while maintaining their interest in consumer services, such as digital platforms, entertainment, restaurants, and healthcare. This sectoral preference highlights the nuanced strategies employed by foreign investors amid global economic challenges.
Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, observed that the moderation in FPI selling and the reversal in flows suggest a stabilizing investor sentiment. However, he cautioned that high crude oil prices remain a significant risk to recovery. Looking ahead, investors are likely to monitor Brent crude prices closely, alongside developments in US-Iran relations. Domestically, attention will focus on the second-quarter earnings for FY27.
In the debt market, FPIs were net sellers in September, withdrawing Rs 1,620 crore through the Fully Accessible Route (FAR) and Rs 772 crore through the Voluntary Retention Route (VRR). Meanwhile, they invested Rs 3,387 crore through the general route, indicating selective engagement in the debt sector.
