New Delhi, 18 October (H.S.): Foreign portfolio investors (FPIs) have continued to remain net sellers in the Indian stock market in October, withdrawing approximately Rs 52,100 crore so far this month. Elevated crude oil prices, rising yields on US government bonds and a strengthening dollar are reportedly prompting foreign investors to pull out their money from Indian equities.
Market experts said persistent inflation in the United States has also raised concerns about the possibility of further interest rate hikes. Against this backdrop, foreign investors are shifting funds from Indian equities to the United States and other markets offering more attractive investment opportunities. According to data from Central Depository Services (India) Limited (CDSL), the latest round of selling has taken total FPI withdrawals from the Indian equity market in 2026 to Rs 3.12 lakh crore.
Foreign portfolio investors also remained net sellers in September, withdrawing Rs 35,861 crore from domestic equities during the month. This followed net investments in July and August, when foreign investors bought more shares than they sold. FPIs invested Rs 20,200 crore in Indian equities in July and purchased shares worth Rs 29,631 crore in August. However, their investment stance reversed in September, with the pace of selling accelerating further in October.
A broader look at FPI investment trends shows that net withdrawals from the Indian equity market have reached Rs 3.12 lakh crore so far in 2026. This is significantly higher than the Rs 1.66 lakh crore withdrawn by foreign investors during the whole of 2025. The figures highlight the sustained pressure on foreign capital flows into the domestic stock market. Despite the buying seen in July and August, cumulative foreign selling remains substantial.
Anil Bhansali, Executive Director of Finrex Treasury Advisors LLP, attributed the continued selling to elevated US Treasury yields, a stronger dollar and rising crude oil prices. He said persistent inflation in the United States was also increasing expectations that the US Federal Reserve could raise interest rates.
In such circumstances, US assets are becoming more attractive to foreign investors, reducing the relative appeal of emerging markets such as India, Bhansali said.
He added that expensive crude oil was placing additional pressure on the Indian economy. Since India imports a substantial portion of its oil requirements, a sustained rise in international crude prices could increase the import bill, fuel inflationary pressures and heighten concerns over the current account deficit.
Meanwhile, a rally in artificial intelligence (AI)-related stocks in North Asian markets is also drawing foreign investment towards those markets rather than India, according to Bhansali.
Although foreign investors made modest purchases on October 16 instead of continuing their selling streak, market experts cautioned against interpreting the move as evidence of a lasting change in sentiment.
Tarkeshwar Nath Vaishnav, chief executive officer of TNV Financial Services, said the temporary improvement in foreign investor sentiment followed a decline in the yield on 10-year US government bonds from above 5.30 per cent to 5.08 per cent, alongside a strengthening of the Indian rupee against the US dollar.
However, Vaishnav described the change as a possible strategic move rather than a clear indication of a major and sustained shift in investment flows.
According to him, foreign investors have been selling shares in financial services and petroleum-related companies. At the same time, they have continued to buy stocks in consumer-facing services, including digital platforms, entertainment, restaurants and healthcare.
The outlook for foreign investment in Indian equities will therefore depend on how global bond yields, currency movements, crude oil prices and inflation expectations evolve in the coming weeks.
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Hindusthan Samachar / Jun Sarkar
