FPIs continue selling (representational image)
NEW DELHI: Foreign Portfolio Investors (FPIs) have withdrawn Rs 48,056 crore from Indian equities in October so far, amid high crude oil prices, escalating Middle East tensions, inflation concerns and weak corporate earnings.
Despite the heavy outflows, selling eased in the week ended October 23, with FPIs turning net buyers on two trading days.The latest withdrawals follow net outflows 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(CDSL).Cumulative FPI outflows in 2026 have reached Rs 3.08 lakh crore, substantially exceeding the Rs 1.66 lakh crore withdrawn during the entire year 2025, the data showed.Dheeraj Gaur, chief investment strategy officer at Choice Wealth, attributed the selling to elevated crude oil prices, which surged to around $114 per barrel amid Middle East tensions, as well as weak corporate earnings, inflation concerns, and uncertainty over domestic liquidity conditions.The Rs 30,213-crore Jio Platforms IPO also temporarily absorbed market liquidity, while global portfolio reallocations added to the pressure on Indian equities.
According to Anand K Rathi, co-founder of MIRA Money, persistently high crude oil prices and concerns over the earnings outlook have continued to drive foreign investors' withdrawals.While second-quarter results have been relatively strong, higher oil and logistics costs could weigh on corporate earnings growth in the coming quarters. Elevated US interest rates have also continued to make American assets attractive, although steady inflows from domestic institutional investors and systematic investment plans (SIPs) have helped cushion the selling pressure, he told PTI.
Why FPI selling eased last week
V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, attributed the moderation in selling to a decline in US bond yields, with the 10-year yield easing from 5.36 per cent to around 5 per cent. The rupee's appreciation to 94.94 against the US dollar and attractive valuations, particularly among large-cap stocks, also contributed to the shift in investor activity.Vedant Gupte, Co-Founder and CEO of investment platform Trackk, said the scale of the outflows appeared less alarming than it might suggest, given that foreign ownership of Indian equities was already at multi-year lows and domestic investors accounted for a larger share of the market.He added that foreign investments through initial public offerings (IPOs) indicated that the selling could reflect a rotation out of existing holdings rather than a loss of confidence in India.Foreign investors remained net sellers in the Indian debt market in September. They withdrew Rs 3,858 crore through the Fully Accessible Route (FAR) and Rs 1,332 crore through the Voluntary Retention Route (VRR), while investing Rs 3,737 crore through the general route.
US policy decisions, crude oil prices to guide sentiment
The moderation in FPI selling offers some relief, although elevated crude oil prices and broad-based weakness in the equity market continue to pose downside risks.Pabitro Mukherjee, deputy vice president-research at Bajaj Broking, said market participants would closely track the US Federal Reserve's Federal Open Market Committee (FOMC) policy decision and the Bank of Japan's interest rate decision in the coming week.US gross domestic product (GDP) data will also be a key focus on the domestic and global macroeconomic front. Movements in Brent crude prices, developments in the US-Iran and Russia-Ukraine conflicts, and the ongoing corporate earnings season will also influence investor sentiment, Mukherjee added.