Foreign portfolio investors (FPIs) sold Rs 45,536 crore of equity in September, while still investing Rs 9,676 crore in the primary market. The selling spree continued into the month‑end and carried into October, with provisional equity selling from September 28 to October 1 amounting to about Rs 34,965 crore and settled sales around Rs 27,962 crore.
Experts point to several factors behind the sharp FPI outflow. The rise in the U.S. 10‑year bond yield to above 5.2 percent and concerns that crude oil prices may stay elevated have weighed on sentiment. Dr. VK Vijayakumar, chief investment strategist at Geojit Investments, added that the eight‑week streak of market losses and a 13 percent deficit in monsoon rains further weakened investor confidence.
The market correction has made large‑cap valuations more attractive, but analysts say a reversal of FPI selling will require a decline in crude prices and U.S. bond yields. The positive flows seen in July and August, driven by expectations of lower crude, proved temporary.
Secondary‑market selling versus primary‑market buying suggests that foreign investors are not abandoning India; they are becoming more selective about where they deploy capital, a trend likely to continue into October, said Dheeraj Gaur, chief investment strategy officer at Choice Wealth.
Domestic institutional investors provided a counterweight to the FPI sell‑off. DIIs bought Rs 76,030 crore in cash equity during September, according to provisional NSE data. Analysts noted that FPIs are willing to sell in the neighbourhood but still buy new assets.
In the coming days, the market will be influenced by FY27 Q2 earnings. Companies reporting strong results and positive management commentary are expected to attract buying, while sustained buying by DIIs and retail investors continues to support the market and prevent a major crash.
