The withdrawal of foreign portfolio investors (FPIs) from the Indian stock market continued in the month of October. Last month, foreign investors withdrew a net ₹ 34,843 crore from the Indian market. This is the second month in a row that foreign investors have sold this much. Earlier in September too, it had sold shares worth ₹35,861 crore. However, amid this heavy sell-off, there was some relief news for the market in the last few days of October. In the last week of the month, foreign investors’ mood seemed to have changed and they were again seen buying and selling.
Withdrawals of ₹ 2.95 lakh crore so far this year
Data from the Central Depository Services Limited (CDSL) shows that foreign investors’ attitude towards the Indian market in the year 2026 has remained quite volatile. Including the October selloff, foreign investors have withdrawn a total of ₹2.95 lakh crore from the Indian stock market so far this year.
Interestingly, in the middle of the year, foreign investors showed good confidence in the Indian market. In July, it had invested around ₹20,200 crore. After this, ₹ 29,631 crore was invested in the market in August as well. But as soon as September came, his strategy changed completely. After September, he sold shares continuously in October as well. In the week ending 23rd October alone, they had net sales of around ₹2,700 crore.
Due to crude oil prices, the market math has gone wrong
Why are foreign investors withdrawing money from the Indian market? Anand K Rathi, co-founder of Meera Money, says there are three main reasons behind this. First, rising crude oil prices. Second, rising interest rates around the world. Third, uncertainty about companies’ earnings.
According to Anand, there is a direct threat of inflation in India due to the rise in crude oil prices. It also puts pressure on the profits of Indian companies. Apart from this, the bond yield in America has become very attractive. This is the reason why foreign investors are rapidly withdrawing money from the Indian market and investing in safe havens. Amid this heavy sell-off, domestic institutional investors (DIIs) have played a major role in driving the market. The impact of foreign sales has been reduced to a large extent due to buying by local investors.
Why did the attitude change in the last week?
After selling for a whole month between October 26 and 30, foreign investors took a sudden U-turn. During this period, he invested around ₹6,300 crore in the Indian stock market. On three of the last four trading days in October, they bought more than sold. Due to this support, the market regained momentum and the Nifty once again managed to cross the 23,000 mark.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the US Federal Reserve has decided to keep interest rates steady. With this, the valuation of Indian large-cap stocks has now become attractive. The domestic economy is also showing signs of continued strength. Due to all these reasons the sentiment of foreign investors has improved. Also, the global AI trade has weakened due to the fall in the stocks of AI companies around the world. It is also expected to support the Indian market.
Where did the money stay, where was it sold?
When foreign investors returned to buying in the final days of October, their preferences changed. VK Vijayakumar says foreign investors kept their distance from large financial stocks and continued to sell in them. In contrast, it bought heavily in select stocks from the pharma and healthcare sectors. Apart from this, there was good interest in the shares of some digital platform companies.
Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking believes that this shift in FPI investment is very positive for market sentiment. But risks related to high crude oil prices and political events around the world have not gone away. These reasons can stop the upward trend in the market.
Investors will be watching several major global developments in the coming days. These include US midterm election results, Brent crude prices, the US-Iran war and the status of the Russia-Ukraine war. Apart from this, the quarterly results of Indian companies will also determine the direction of the market. Anand K Rathi and other experts categorically say that the market has definitely been relieved by buying in the last week, but it is too early to assume that selling by foreign investors has stopped completely.
