Key Highlights

  • October Outflow: FPIs have sold Rs 53,337 crore in October so far, while investing a net Rs 5,281 crore through the IPO market.
  • 2026 Tally: Total FPI selling through exchanges this year stands at Rs 3,69,164 crore, according to Geojit’s Dr VK Vijayakumar.
  • Selling Slows: FIIs were net sellers for a 10th straight week but sharply cut selling in the week ended October 23, even turning buyers on two days.
  • Broader Market Bloodbath: The Nifty Midcap 100 fell 5.6 per cent and Nifty Smallcap 100 crashed 7.3 per cent, while the Nifty 50 slipped just 2.35 per cent.
  • Crude the Key Risk: Analysts warn that FPIs are likely to sell the dip as long as Brent crude stays above $100 a barrel.

Foreign portfolio investors (FPIs) continued to pull money out of Indian equities in October, with total selling reaching Rs 53,337 crore so far this month. During the same period, net FPI investment through the IPO market stood at Rs 5,281 crore, showing that foreign investors remain selective rather than entirely absent.

“The total FPI selling through the exchanges for this year stood at Rs 3,69,164 crore,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Crude Oil: The Biggest Headwind

Analysts said that as long as Brent crude remains above $100 a barrel, the economy will face pressure and FPIs are likely to sell the dip. High crude prices are acting as a strong headwind for both the economy and the market.

For India, which imports most of its crude oil requirement, sustained high prices can widen the trade deficit, push up inflation and squeeze corporate margins, all of which weigh on foreign investor sentiment.

A Silver Lining: Selling Is Moderating

FIIs remained net sellers for the 10th consecutive week. However, in the week ended October 23, they significantly reduced their selling and even turned buyers on two days.

Three factors helped. US bond yields moderated, with the 10-year yield easing from 5.36 per cent to around 5 per cent. The rupee appreciated to 94.94 against the dollar. And valuations, particularly of large-cap stocks, became more attractive.

Analysts said the steady moderation in FII selling offers some comfort, though elevated crude prices and sharp weakness in the broader market keep downside risks alive.

Mid- and Small-caps Take the Hardest Hit

The standout trend of the week was the sharp correction in mid- and small-cap stocks. The Nifty Midcap 100 plunged 5.6 per cent and the Nifty Smallcap 100 crashed 7.3 per cent, while the Nifty 50 was relatively resilient with a decline of only 2.35 per cent.

Analysts said forced liquidation of margin-funded long positions in the broader market is rumoured to have triggered the crash.

Why Large-caps Held Up

The relative strength of large-caps is mainly due to steady buying by domestic institutional investors (DIIs), which are flush with funds and have been accumulating fairly valued large-cap stocks. This domestic support has acted as a cushion against foreign outflows.

Why It Matters

The week’s market action highlights a growing divide. Large-caps backed by domestic institutions are holding steady, while the broader market, where retail and leveraged positions are more common, is far more vulnerable to sharp falls. For retail investors, the episode is a reminder of the risks of leverage in volatile conditions.

What Comes Next

Market direction in the coming weeks will depend largely on crude oil prices, US bond yields and the rupee. If crude eases and FII selling continues to slow, sentiment could stabilise; if Brent stays above $100, pressure on the market is likely to persist.

(With inputs from IANS)