Foreign investors have withdrawn ₹44,166 crore from Indian equities so far in October, bringing the total outflows this year to more than ₹3 lakh crore as elevated crude oil prices, a firmer US dollar and higher US bond yields weigh on investor sentiment.
Also, the artificial intelligence-led rally in North Asian markets attracts higher foreign capital.
The latest outflows follow a net withdrawal of ₹35,861 crore in September. Before this, foreign portfolio investors (FPIs) had invested ₹20,200 crore in Indian equities in July and ₹29,631 crore in August, data from the NSDL showed.
With the latest selling, FPI withdrawals from Indian equities in 2026 have reached ₹3.04 lakh crore, significantly higher than the ₹1.66 lakh crore recorded during the entire 2025, the data noted.
Vedant Gupte, Co-Founder and CEO of investment platform Trackk, said the selling should be viewed more as a global repositioning of capital than a verdict on India’s investment prospects.
“Crude prices staying elevated on Gulf supply risk, a firmer dollar and US yields pulling money back to safer ground, and FPIs chasing the AI rally in North Asian markets where valuations currently look cheaper,” he said.
He said these factors did not indicate India-specific weakness, but reflected capital moving towards markets where the global macroeconomic narrative was currently stronger.
“We remain constructive on the medium-term outlook because domestic flows have absorbed this selling without the market cracking, which tells you the floor is sturdier than the headline outflow number suggests,” Gupte said.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said massive FPI selling was the primary reason for the Indian market’s underperformance this year, with the Nifty delivering negative returns of 13.87 per cent year-to-date in 2026.
From the perspective of foreign investors, withdrawing money from India was rational, given that the risk-free return on 10-year US government bonds was above 5.2 per cent, he said.
“So, as long as the US bond yields remain elevated, FPIs will continue to sell. The scenario will change when the valuations become attractive, and the risk-reward ratio turns favourable for investment,” Vijayakumar said.
He added that the market had been trending downwards over the past two months, with elevated crude oil prices and high US bond yields emerging as two major headwinds.
Meanwhile, foreign investors also extended their selling to the debt market in September. They withdrew ₹1,921 crore through the Fully Accessible Route (FAR) and ₹233 crore through the Voluntary Retention Route (VRR), while investing ₹4,729 crore through the general route.