Overseas portfolio investors maintained their aggressive selling stance in Indian equity markets through October. Over the course of the month, foreign portfolio investors pulled out Rs 34,843 crore by offloading domestic equities. This marks the second straight month of massive capital outflows by foreign institutions from the Indian market. However, market activity took a positive turn in the final days of the month, with overseas investors infusing approximately Rs 6,300 crore into domestic equities between October 26 and October 30.
Total Outflows in 2026 Mount to Rs 2.95 Lakh Crore
According to official depository figures, foreign portfolio investors had already withdrawn Rs 35,861 crore from Indian equities in September. This selling streak followed a robust period of accumulation during the summer months, when overseas funds poured Rs 20,200 crore into Indian shares in July and added another Rs 29,631 crore in August. With October's heavy net selling factored in, total capital pulled out of Indian equities by foreign investors during calendar year 2026 has reached Rs 2.95 lakh crore.
Emerging Signs of Short-Term Sentiment Stabilization
The sudden resumption of buying in the concluding trading sessions of October points toward an improvement in near-term market sentiment. Market analysts observe that while late-month purchases provided relief to domestic bourses, a single week of inflows cannot yet be interpreted as a durable turnaround or a permanent return of offshore institutional liquidity. Continued tracking of macroeconomic variables will be required to confirm the trend.
Impact of Elevated Crude Oil and Attractive US Bond Yields
Anand K. Rathi, co-founder of Mira Money, noted that key drivers behind October's heavy selling included elevated international crude oil prices, anxiety surrounding global interest rate paths, and expectations regarding corporate quarterly earnings. He pointed out that elevated oil prices raise inflation risks in India and compress corporate profitability margins. Concurrently, competitive and attractive yields on US government bonds have encouraged global capital allocators to steer their resources toward American fixed income.
Support from Domestic Institutions and Key Drivers Ahead
Anand Rathi further remarked that the continuation of foreign buying momentum will rely heavily on global macroeconomic developments, future oil price trajectories, and incoming corporate financial performance. Throughout this period of overseas selling, Indian domestic institutional investors stepped up with substantial buying support, absorbing foreign sales and playing a pivotal role in cushioning market stability.
FPIs Turn Net Buyers in Three Out of Four Final Sessions
V.K. Vijayakumar, chief investment strategist at Geojit Investments, noted that foreign portfolio investors emerged as net buyers in the cash segment during three of the final four trading sessions of October. He identified key catalysts behind this sentiment revival: the US Federal Reserve's stance to keep interest rates steady, reasonable stock valuations among large-cap Indian companies, and sustained momentum in India's domestic economic expansion.
