Foreign Portfolio Investors (FPIs) have withdrawn ₹8,056 crore from Indian equities in October, driven by elevated crude oil prices and geopolitical tensions in West Asia. This marks a significant increase in outflows compared to the previous year, with cumulative withdrawals in 2026 reaching ₹3.08 lakh crore, far surpassing the ₹1.66 lakh crore recorded in 2025.
The recent withdrawals follow a net outflow of ₹35,861 crore in September. Despite these figures, FPIs showed signs of easing their selling pressure last week, turning net buyers on two trading days. This shift suggests a potential stabilization in the market, although concerns remain over inflation and weak corporate earnings.
Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, attributed the FPI selling to the surge in crude oil prices, which have reached approximately $114 per barrel due to the ongoing tensions in West Asia. He also pointed to weak corporate earnings and inflation concerns as contributing factors. Additionally, the ₹30,213-crore Jio Platforms IPO temporarily absorbed market liquidity, while global portfolio reallocations added further pressure on Indian equities.
Despite the challenges, domestic institutional investors and systematic investment plans (SIPs) have provided some support to the market. Elevated U. S. interest rates have made American assets more attractive, yet the rupee's appreciation to 94.94 against the U. S. dollar and attractive valuations, particularly among large-cap stocks, have helped moderate the selling.
V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., noted that the decline in U. S. bond yields, with the 10-year yield easing from 5.36% to around 5%, has contributed to the reduction in FPI selling. He emphasized that foreign ownership of Indian equities is at multi-year lows, and domestic investors now hold a larger market share.
Vedant Gupte, Co-Founder and CEO of Trackk, highlighted that the scale of outflows might not be as alarming as it appears, given the context of foreign investments through IPOs. He suggested that the selling could reflect a rotation out of existing holdings rather than a loss of confidence in the Indian market.
Debt Market and Future Outlook
In the Indian debt market, foreign investors have also been net sellers in October, withdrawing ₹3,858 crore through the Fully Accessible Route (FAR) and ₹1,332 crore through the Voluntary Retention Route (VRR). However, they invested ₹3,737 crore through the general route.
Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, indicated that the moderation in FPI selling offers some relief, but elevated crude oil prices and broad-based weakness in the equity market continue to pose risks. Market participants are closely monitoring the U. S. Federal Reserve's Federal Open Market Committee (FOMC) policy decision and the Bank of Japan's interest rate decision in the coming week.
On the macroeconomic front, U. S. gross domestic product (GDP) data will be a key focus for investors. Movements in Brent crude prices, developments in the U. S.-Iran and Russia-Ukraine conflicts, and the ongoing corporate earnings season will also influence investor sentiment.
