Foreign investors sold about ₹48,000 crore of Indian shares in October, taking this year’s total outflow to a record ₹3.08 lakh crore. But they kept investing in new listings, including Jio’s IPO. They are not leaving India entirely; they are selecting where to put their money.
Foreign portfolio investors (FPIs) sold Indian equities again in October. Depository data shows net sales of ₹48,056 crore for the month, taking cumulative 2026 outflows to about ₹3.08 lakh crore, almost twice the ₹1.66 lakh crore sold in all of 2025 and the largest annual outflow on record.
September’s outflow was ₹35,861 crore. Selling has been heavy for several months.
Why foreign investors are selling
Three reasons have been consistent:
- US bond yields. US 10-year Treasury yields have been above 5%, so foreign investors can earn high returns with little risk in the US. With the Fed still considering more increases, that is unlikely to change soon.
- AI stocks elsewhere. Until recently, global investors were moving money into AI-linked markets in Korea, Taiwan, Japan and the US. India has few direct AI stocks, so it lost out on those flows. Geojit’s VK Vijayakumar said the AI rally in North Asia drew foreign capital away from India.
- Oil and the rupee. Brent above $110 and a rupee near 95 to the dollar reduce foreign investors’ dollar returns and increase India’s economic risks.
Financial stocks have been sold most heavily, with about ₹8,634 crore of foreign outflows in the first half of October alone.
The primary market is different
The more revealing figure is in new listings. Foreign investors sold about ₹3.64 lakh crore of shares in the secondary market by mid-October, but put a net ₹56,485 crore into the primary market.
That means foreign funds are selling existing holdings while buying new issues they consider worthwhile. The clearest example is Jio Platforms’ IPO, where qualified institutional buyers, including many foreign funds, subscribed more than 70 times their allocation.
So foreign investors are not abandoning India. They are reducing exposure to the broad market, especially banks and expensive mid-sized companies, and concentrating on large, distinctive opportunities.
Domestic investors are making up the difference
The reason Indian markets have not fallen much further is domestic money. Domestic institutions have bought more than ₹6.8 lakh crore of shares this year, more than double foreign selling, supported by record monthly SIP inflows from retail investors. Domestic ownership of Indian shares is now at a record level.
That is why the Nifty, after falling about 14% this year, managed to end October higher despite foreign selling.
Could the trend reverse?
There were some signs of change in late October. Foreign investors were net buyers on a few days, and the global AI selloff this week may lead some investors to reconsider markets with little AI exposure. India’s valuations have also fallen.
A sustained return of foreign money probably needs two things: lower US bond yields, which depends on the Fed, and lower oil prices, which depends on the Gulf. Neither is likely soon. Until then, Indian shares will continue to rely mainly on domestic investors.
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