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Foreign portfolio investors have significantly pulled out Rs 52,100 crore from Indian equities in October, influenced by global economic pressures such as elevated crude oil prices, rising US bond yields, and a strengthening dollar.
Illustration: Dominic Xavier/Rediff
Key Points
- Foreign portfolio investors (FPIs) have withdrawn Rs 52,100 crore from Indian equities in October, following a Rs 35,861 crore outflow in September.
- Key factors driving the outflows include elevated US bond yields, a stronger dollar, rising crude oil prices, and expectations of a Federal Reserve rate hike due to sticky US inflation.
- The cumulative FPI outflow from Indian equities in 2026 has reached Rs 3.12 lakh crore, significantly higher than the Rs 1.66 lakh crore withdrawn in 2025.
- FPIs briefly turned marginal buyers on October 16, attributed to a decline in US 10-year bond yields and a strengthening rupee, though this is seen as tactical.
- While FPIs sold shares in financial services and oil-related companies, they remained buyers in consumer services, including digital platform companies, entertainment, restaurants, and healthcare services.
Foreign portfolio investors (FPIs) have withdrawn Rs 52,100 crore from Indian equities in October so far, as elevated crude oil prices, higher US bond yields and a stronger dollar weighed on investor sentiment.
The latest outflow follows a net withdrawal of Rs 35,861 crore in September. FPIs had invested Rs 20,200 crore in Indian equities in July and Rs 29,631 crore in August, according to data from the Central Depository Services Ltd (CDSL).
Cumulative Outflows and Global Factors
With the latest selling, cumulative FPI outflow from Indian equities in 2026 has reached Rs 3.12 lakh crore, way higher than the Rs 1.66 lakh crore withdrawn during the entire 2025, the data showed.
Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, said FPIs continued to sell Indian equities amid elevated US bond yields, a stronger dollar and rising crude oil prices.
Sticky US inflation has also fuelled expectations of a Federal Reserve rate hike, making US assets more attractive to foreign investors, he said.
Meanwhile, expensive crude oil is adding to economic pressures in India, while the AI-led rally in North Asian markets is drawing foreign funds away from domestic equities, Gaur added.
Temporary Reversal and Sectoral Trends
However, foreign investors turned marginal buyers on October 16.
This brief reversal is likely to be tactical rather than indicative of a structural shift in investor sentiment.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said the marginal decline in the US 10-year bond yield from above 5.3 per cent to 5.08 per cent and the rupee’s strengthening against the dollar were significant factors behind the temporary change in FPI stance.
Sectorally, FPIs continued to sell shares in financial services and oil-related companies.
However, they remained buyers in consumer services, including digital platform companies, entertainment, restaurants and healthcare services, he added.
Outlook and Debt Market Activity
Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, said the sharp moderation in FPI selling and the reversal in flows on Friday indicated that investor sentiment was stabilising, although elevated crude oil prices continued to pose a risk to any recovery.
Going ahead, investors will track Brent crude prices and developments in US-Iran relations, while domestic attention will remain on second-quarter earnings for FY27, Mukherjee said.
Meanwhile, foreign investors also remained net sellers in the debt market in September.
They withdrew Rs 1,620 crore through the Fully Accessible Route (FAR) and Rs 772 crore through the Voluntary Retention Route (VRR), while investing Rs 3,387 crore through the general route.
