Foreign institutional investors have sold Indian shares worth over Rs 26,000 crore in the last three trading sessions, deepening pressure on equities after a sharp September correction led by high crude oil prices, elevated US bond yields and a weaker rupee.
Provisional data showed FIIs sold shares worth Rs 10,148 crore on Thursday, following outflows of Rs 10,743 crore and Rs 5,538 crore on the previous two days, respectively.
The selling came in a weak month for domestic equities. Benchmarks Nifty and Sensex each fell about 5.7% in September, while foreign investor outflows for 2026 crossed Rs 2.5 lakh crore, according to NSDL data.
"The sharp correction in Nifty in September, so far, was triggered mainly by elevated crude and high US bond yields. The correction turned intense during the last few days when FIIs turned big sellers," said V K Vijayakumar, chief investment strategist at Geojit Investments.
He said foreign selling was understandable in the current global rate environment. "In the context of the 10-year US bond yields hovering around 5.2%, this FIIs selling is a rational act," Vijayakumar said.
Higher US bond yields reduce the relative appeal of emerging market equities because global investors can earn stronger returns from dollar assets. At the same time, crude oil has become a major risk for India. Since India imports most of its oil requirement, high crude prices can widen the current account deficit, add to inflation pressure and weigh on the rupee.
Analysts said the latest selling also reflects a broader shift in foreign capital allocation. FIIs have been moving money towards AI-heavy Asian markets such as South Korea and Taiwan, while remaining cautious on Indian secondary market valuations.
According to Reuters, Nifty was the worst performer among Asian markets during the September derivative series, with foreign investors also carrying bearish index futures positions into the new series.
Dheeraj Gaur, chief investment strategy officer at Choice Wealth, said foreign investors are not fully exiting India, but are becoming more selective. He said FIIs continue to avoid the secondary market even as they remain active in IPOs and fresh listings.
Despite the weak near-term trend, Vijayakumar said the market correction has opened opportunities for domestic investors. He said largecap stocks with good growth prospects have reached attractive valuations and called it a value-buying opportunity. He identified financials, especially large banks, capital goods, telecom and automobiles as segments where valuations have turned more reasonable.
Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.
