News26 October 2026By BlinkMoney Editorial

Why Are FIIs Selling Indian Shares in October 2026?

Foreign portfolio investors have net sold ₹45,785 crore of Indian equities in October through trades to 23 October, per NSDL, as crude oil, US bond yields and a weaker rupee weighed on the market.

Foreign portfolio investors (FPIs), often called FIIs in Indian media, have net sold ₹45,785 crore of Indian equities in October, according to NSDL data for trades up to 23 October. The selling has coincided with higher crude oil prices, high US bond yields, a weaker rupee and the Reserve Bank of India's (RBI) rate hike on 7 October. It eased in the last week of trading.

The numbers

October so far: net outflow of ₹45,785 crore (NSDL, reported on 26 October, covering trades to Friday 23 October). Other reports use different bases. PTI reported ₹48,056 crore on 25 October, citing CDSL data. Geojit's V.K. Vijayakumar put October selling at ₹53,337 crore through 23 October. The ₹2,271 crore gap between the PTI and NSDL figures matches the net equity inflow NSDL recorded on its 26 October update, which suggests the PTI figure predates that update.
2026 year to date: net outflow of ₹3.06 lakh crore (NSDL). Press reports put the full-year 2025 outflow at ₹1.66 lakh crore, so 2026 is about ₹1.4 lakh crore ahead of that total.
Market: In the week ended 23 October, which had four sessions after a 20 October holiday, the Nifty 50 fell 2.4% to 22,600 and the Sensex fell 2.1% to 73,123.83. The Nifty Midcap 100 fell 5.6% and the Nifty Smallcap 100 fell 7.3%.

Crude oil

Brent crude settled at $116.72 a barrel on 23 October, its highest settlement since 29 April, after Houthi attacks on Saudi Arabia raised concern about supply disruption. Brent rose about 6% over the week, according to Reuters. Reports link high crude to inflation, input costs and corporate margins in an oil-importing economy. Vijayakumar said that while Brent stays above $100, pressure on the economy will persist and foreign investors are likely to sell into dips.

US bond yields and the dollar

The US 10-year and 30-year Treasury yields reached 24-year highs in early October, and the dollar index rose above 102, according to Trading Economics on 6 October. Vijayakumar said the 10-year yield had been 5.36% before easing to around 5% in the week to 23 October. Higher US yields make US assets more attractive relative to Indian equities. Reports cite them, along with the dollar's strength, as pressure on the rupee.

The rupee

The rupee weakened to about 96.4 per dollar in early October, close to its record low. On 8 October it reached 96.78, within reach of its all-time low of 96.96 set in May, according to Reuters. It was down more than 7% against the dollar for 2026 at that point. The rupee firmed in the week to 23 October, touching a six-week high of 94.30 and settling at 94.94. NSDL's conversion rate for its 26 October update was ₹94.9432 to the dollar.

Earnings and valuations

Reports cite weak corporate earnings among the reasons for the selling, but none of them gives an earnings figure. Valuations pointed the other way in the last week. Vijayakumar said low valuations, particularly of large-cap shares, helped slow the selling.

The RBI rate hike

On 7 October the RBI's Monetary Policy Committee raised the policy repo rate by 25 basis points to 5.50%, from 5.25%. The vote was unanimous, and the committee changed its stance to "calibrated tightening". The RBI said rate cuts were off the table in the near term, and that its next step could be a hike or a pause, depending on conditions. Reports list the hike among the reasons for the selling, but the flow data do not separate its effect from the other factors.

Why selling eased in the last week

FPIs were net buyers on two of the four sessions in the week to 23 October: ₹1,022 crore on 21 October and ₹888 crore on 23 October, according to exchange data reported by CNBC-TV18. Across the four sessions they were net sellers of ₹2,697 crore on exchanges, while domestic institutions bought ₹10,942 crore.

Vijayakumar, Chief Investment Strategist at Geojit Investments, gave the reasons on 25 October:

The moderation in US bond yields with the 10-year yield declining from 5.36% to around 5%, appreciation in the rupee to 94.94 to the dollar and the low valuations, particularly of the large-caps, contributed to the moderation in FII selling.

Who is buying

Domestic mutual funds bought a net ₹38,489 crore of equities on the exchanges from 1 to 13 October, according to SEBI's daily data. These are the funds' own trades, not investor subscriptions. The period is shorter than NSDL's October series, so the two figures cannot be netted directly.

Systematic investment plan (SIP) contributions into mutual funds reached a record ₹32,490 crore in September, according to the Association of Mutual Funds in India (AMFI) data released on 12 October, as reported by Financial Express. Equity mutual funds took in net ₹38,307 crore in the same month. Domestic buying absorbed part of the foreign selling, but the Nifty still fell in the week to 23 October.

What it means for a SIP investor

These are facts about how SIPs work, not investment advice.

A SIP instalment buys units at the day's net asset value (NAV). When the NAV falls, the same instalment buys more units. For example, ₹10,000 buys 100 units at a NAV of ₹100 and 125 units at ₹80. The figures are illustrative.
An investor who redeems below the average cost of their units realises the loss at the NAV on the day of sale. Investors who keep their units remain exposed to prices at the time they redeem, which cannot be known in advance.
Whether a holding ends above its cost depends on the NAV at redemption. This article does not forecast whether FPI selling will continue or whether prices will recover.

Sources and links

Source: Original source