FPIs sell Rs 45,536 crore worth equity in Sep, valuations of large-caps turn attractive

Foreign portfolio investors sold Rs 45,536 crore worth of Indian equities in September while investing Rs 9,676 crore through primary markets. Rising US bond yields, elevated crude prices and weak monsoons pressured sentiment, while domestic institutional buying provided significant support

New Delhi: Foreign portfolio investors (FPIs) turned heavy sellers in September with total equity selling of Rs 45,536 crore. However, they continued to invest through the primary market with investment of Rs 9,676 crore last month. FPI selling in the recent days has been huge.

The surge in the US 10-year bond yield to above 5.2 per cent and concern that crude might remain elevated for longer also influenced the renewed FPI selling, according to experts. “Sustained FPI selling has significantly weakened the Indian market which witnessed eight consecutive weeks of losses. The poor monsoons this year with 13 per cent deficient rains also impacted sentiments,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

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The sharp correction in the market has made the valuations of large-caps attractive. But a reversal of the FPI selling will need positive developments including decline in crude and US bond yields, said analysts. The positive FPI flows in July and August on expectations of decline in crude prices turned out to be a temporary phenomenon.

Across the four sessions from September 28 to October 1, provisional equity selling was about Rs 34,965 crore, while settled equity selling for the corresponding reported activity was about Rs 27,962 crore. Foreign selling accelerated sharply into the month-end and carried into October.

“This secondary-market selling versus primary-market buying suggests that foreign investors are not simply switching off India; they are becoming much more selective about where they deploy capital, a trend likely to continue into October,” said Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth.

On the other hand, domestic institutional flows for September 2026 provided a significant counterweight to the FPI sell-off. DIIs bought Rs 76,030 crore in the cash equity market during September, provisional NSE data showed. In other words, FPIs appear happy to sell the neighbourhood but are still willing to buy a new apartment in it, said analysts. In the coming days, the market will be influenced by the FY27 Q2 results.

Companies that report good Q2 numbers along with positive management commentary are likely to witness buying. Sustained buying by DIIs and retail investors has been supporting the market preventing a major crash.