FPIs Sell $5.04 Billion of Indian Stocks in the First Half of October 2026

FPI NET SELLING INTENSIFIES IN FIRST FORTNIGHT OF OCTOBER

In September, FPIs turned net sellers in equities after 2 months of net buying. While the H1-Sep-26 FPI net selling in equities was subdued at $(1.47) billion; H1-Oct-26 saw FPI net selling intensifying to $(5.04) billion. Geopolitical uncertainty was magnified by a spike in Brent Crude prices. Rising bond yields in the US also triggered FPI selling.

FPI equity AUC (assets under custody) fell to $694 billion as of mid-October 2026, while overall AUC of equity and debt combined bounced to $773 billion. Both are down nearly -1.3% compared to the previous month. If you compare with the peak AUC of September 2024, the FPI AUC as of Oct-2026 is nearly -27% down in value.

Data Source: NSDL

WHY FPI SELLING INTENSIFIED IN FIRST HALF OF OCTOBER 2026?

• With the CPI and WPI inflation in India touching multi-year highs, the pressure on the RBI is growing to implement one more rate hike of 25-bps in December. That has larger implications for equity valuations in Indian markets.

• India 10-year bond yield spreads with the US has widened slightly to 230 basis points. However, with an annual rupee depreciation of 3.45% against the dollar, that is the bare minimum spread FPIs will expect to get flows back to India.

• Crude oil remains a major concern for the FPIs investing in India. India has relied on imports for nearly 90% of its annual consumption. Apart from the price, other costs like freight and insurance are at record highs, which is adding to the landed costs.

• On Q2FY27 results; IT and hospitality are robust. However, banking is facing thinning of NIMs. The major concern is on the consumer goods and services, that are facing a double whammy of slowing rural sales and rising input costs.

Domestic equity inflows have been robust at ₹1,82,654 crore in H1FY27. However, FPI flows do have an accelerated effect on markets due to the currency impact.

SECTORAL FPI FLOWS IN OCTOBER 2026 (FIRST FORTNIGHT)

FPIs were net sellers of $(5.04) billion in H1-October 2026, which is underscored by the fact that 18 out of 23 sectors listed by NSDL saw net FPI selling in the period.

• It was once again BFSI that led the selling at $(908) million in the first fortnight of October. While rate hikes are a concern, the bigger headwind is the impact that the high-cost FCNR(B) deposits would have on the cost of funds and NIMs of banks.

• FMCG was another sector that witnessed heavy selling of $(860) million. Rural demand has been hit by a poor monsoon this year and that is showing in demand. In addition, input costs linked to oil cycle are pushing up costs for FMCG companies.

• Automobiles saw net selling of $(687) million, with rural demand being a key factor. It had an impact on the demand for tractors (which contracted in September), as well as entry level vehicles. Higher rates of interest are likely to impact affordability.

• FPIs were net buyers in Healthcare between July and September. However, October saw FPIs net selling healthcare stocks worth $(578) million. Apart from US tariff and regulatory concerns, stretched valuations also kept FPIs cautious.

• Capex concerns saw FPIs net sellers in Telecom and Capital Goods to the tune of $(822) million. Despite rising prices of minerals; metal and oil companies also saw pressure due to higher input costs and weak marketing margins respectively.

• The sole sector that saw some meaningful buying in October was IT, which saw FPIs infuse $273 million into the sector. While TCS results were one factor, reallocation from AI stocks to traditional IT stocks continues in FPI equity portfolios.

For FPIs, concerns in India are less about micros, and more about macros. Factors like elevated crude prices, narrow bond yield differentials, geopolitical risk, and a weak rupee are the major headwinds. That is unlikely to go away in a hurry!