Sustained selling pressure from foreign portfolio investors continues to weigh on Indian equity markets. In October, offshore funds offloaded equities worth Rs 44,166 crore, accelerating net outflows across domestic bourses. With this latest wave of selling, aggregate capital pulled out by overseas funds in 2026 has crossed the Rs 3.04 lakh crore mark. Market analysts attribute this exodus primarily to elevated crude oil prices, a resilient US dollar, and climbing yields on US government debt securities.
2026 Outflows Outpace Previous Year After Fleeting Monsoon Inflows
According to depository statistics from National Securities Depository Limited, foreign investors had previously offloaded Rs 35,861 crore worth of Indian shares in September. This selling streak followed a temporary revival over the summer months, during which offshore funds purchased Rs 20,200 crore of equities in July and added another Rs 29,631 crore in August. Despite those mid-year inflows, net liquidations across 2026 have substantially eclipsed the figures recorded in the preceding calendar period. Throughout 2025, total foreign portfolio outflows from Indian bourses stood at Rs 1.66 lakh crore, an amount that has nearly doubled to top Rs 3.04 lakh crore so far in 2026.
Geopolitical Supply Risks and High Treasury Yields Divert Capital
Vedant Gupte, co-founder and chief executive officer of investment platform Track, pointed out that the sustained selling should be interpreted as a global reallocation of capital rather than a loss of confidence in India's structural economic potential. Persistent supply risks originating in the Gulf region have kept crude oil prices elevated. Concurrently, a strengthening US dollar and elevated US bond yields offer global money managers attractive returns in lower-risk avenues. Gupte also noted that foreign institutional capital is increasingly rotating toward North Asian equity markets, fueled by an ongoing rally in artificial intelligence sectors.
Nifty Drops 13.87 Percent Year to Date Amid Institutional Selling
Highlighting the direct impact of foreign institutional liquidation, V. K. Vijaykumar, chief investment strategist at Geojit Investments Limited, noted that offshore selling remains the primary driver behind the relative underperformance of domestic equities this year. The benchmark Nifty index has fallen 13.87 percent so far in 2026. Vijaykumar observed that reallocating money away from emerging market equities aligns with market fundamentals when 10-year US sovereign bond yields hover above 5.2 percent, providing fund managers with substantial yields in high-safety assets.
