Why FPI selling may not be the story it looks

Nifty23, 140.5077.41. Motilal Oswal Midcap Fund Direct-Growth.

Key points

• Top Trending Stocks: SBI Share Cost, Axis Bank Share Rate, HDFC Bank Share Cost, Infosys Share Rate, Wipro Share Cost, NTPC Share Rate.
• While primary-market investments were approximately Rs 5, 848 crore, Gaur remarked, based on settled data, FPIs sold roughly Rs 2, 006 crore in secondary equities during the week.
• The Nifty fell around 0.88% during the week despite a late rebound as oil rates eased and value buying emerged.
• NseFPI flows Indiaforeign investor sellingFPI IPO investmentprimary market inflowssecondary market sellingIndian equity market outlookUS Treasury yieldscrude oil rates India.
• Same playbook, different numbers: Why FPI selling may not be the story it looks like.

Nifty23, 140.5077.41. Motilal Oswal Midcap Fund Direct-Growth. The Economic Times daily newspaper is available online now.

Same playbook, different numbers: Why FPI selling may not be the story it looks like. ETMarkets.comLast Updated: Sep 26, 2026, 05: 05: 00 PM IST.

Indian equities extended their losing streak as elevated crude, US Treasury yields, geopolitical risks and FPI selling weighed on sentiment. Nevertheless, foreign investors continued backing IPOs, selectively buying debt and mid-small caps, suggesting portfolio selectivity rather than a broad withdrawal from Indian markets.

As elevated crude rates, rising US Treasury yields, geopolitical uncertainty and accelerating foreign portfolio investor (FPI) outflows weighed on market sentiment, indian equities remained under pressure this week, with the Nifty 50 extending its losing streak to seven weeks, its longest in six years. The Nifty fell around 0.88% during the week despite a late rebound as oil rates eased and value buying emerged.

Nevertheless, the headline FPI equity outflow masks a more nuanced pattern in foreign investor behaviour. While FPIs remained sellers in the secondary market, they continued to commit substantial capital to primary-market opportunities and indicated selective appetite for Indian debt. Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, remarked provisional NSE data demonstrated FPIs were net sellers of Rs 11, 490 crore in equities between September 21 and 25. Nevertheless, settled depository data from NSDL/CDSL demonstrated a net Rs 3, 843 crore inflow into equities during the week. Meanwhile, the divergence was largely explained by continued FPI participation in the primary market, particularly the Rs 5, 515 crore primary-market inflow recorded on September 24. Live Events.

"The underlying secondary-market trend remains cautious. While primary-market investments were approximately Rs 5, 848 crore, " Gaur remarked, based on settled data, FPIs sold roughly Rs 2, 006 crore in secondary equities during the week. "In other words, the foreign investor is not exiting Indian equities uniformly; rather, there is a clear preference for selective primary-market opportunities over broad-based secondary-market exposure, " he remarked. The NSE IPO provides a clear illustration of this trend. While the QIB portion was subscribed 12.68x, the matter closed with a 5.7x overall subscription. FPIs submitted bids for 140.32 million shares, highlighting continued institutional appetite for primary-market opportunities even as foreign investors remained sellers in the secondary market. "This distinction is significant. The FPI behaviour at present looks less like a wholesale withdrawal from India and more like portfolio selectivity – reducing exposure to existing listed equities while allocating capital to specific IPOs/fresh listings where valuations, scarcity and liquidity may be more attractive, " Gaur stated. "It's the same playbook." Debt flows remain resilient.

In practice, the flow picture is not confined to equities. Settled FPI data indicated a net Rs 885 crore inflow into debt-related instruments during the week. Nevertheless, the composition of the flows was significant. The Fully Accessible Route (FAR) for administration securities saw approximately Rs 2, 912 crore of net buying, more than offsetting around Rs 822 crore of selling under the general debt route and roughly Rs 1, 205 crore of selling under the Voluntary Retention Route (VRR). "This suggests that foreign demand has not disappeared from Indian fixed income, but is becoming increasingly sensitive to relative yield, currency risk and the global rate environment, " Gaur remarked. Secondary-market selling continues against the backdrop of selective buying The broader flow picture additionally points to continued FPI selectivity. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, remarked the trend of FPI flows turning negative after positive inflows in July and August had become evident earlier this month. The trend of FPI flows turning negative after positive inflows in July and August was evident early this month. This trend has sustained and the total equity outflows through exchanges have touched Rs 25682 crore this month through 25th August. Additionally the trend of FPI investment through the primary market continues with total investment of Rs 8551 crore up to 25th of this month. This trend of selling through the exchanges and investing through the primary market has taken the total FPI selling this year through exchanges to Rs 295971 crore and the total investment through the primary market during this period to Rs 54398 crore. "Given the high US bond yields and better returns from India's IPO market, this trend is projected to continue. Yet another significant trend in FPI investment is that even though they are sellers in large-caps, they have been sustained buyers in mid-and small-caps. FPIs additionally are chasing the market momentum, " Vijayakumar stated. US yields, crude and the rupee remain key.

Notably, the US rate environment remains one of the central forces influencing FPI flows. The US 10-year Treasury yield was relatively unchanged on Friday after recent selling pressure intensified after hawkish Federal Reserve commentary and stronger-than-expected economic data. Oil rates are another key variable. "Oil and geopoliconomics remain the major risk. Elevated crude rates are particularly a challenge for India as of their immediate impact on the current account, inflation expectations and the rupee, " Gaur noted. "Brent remaining above $100/bbl is not helping at all." Currency risk is additionally notable for foreign investors. The rupee has been hovering around Rs 96 per dollar. The RBI reportedly sold US dollars early in the session on Friday to prevent a breach past the key psychological Rs 96-per-dollar mark. "Even if Indian asset returns remain attractive in rupee terms, depreciation can materially reduce dollar returns, " Gaur remarked. Outlook for next week.

In practice, the near-term FPI outlook is projected to remain data- and macro-sensitive rather than directionally one-way. "A combination of easing crude, stabilisation in US yields and a firmer rupee could encourage some re-engagement in secondary equities. Conversely, another rise in US yields or crude could prolong selling, " Gaur remarked. The headline Rs 11, 490 crore provisional equity outflow therefore does not capture the full complexity of FPI behaviour. Notably, the flow pattern points to continued secondary-market selling alongside solid primary-market participation, selective debt buying and sustained interest in parts of the mid- and small-cap segment. "The next phase of flows will likely hinge on whether the combination of US yields, crude and the rupee stabilises enough to make Indian secondary-market attractive again for FPIs, " Gaur remarked. Disclosure: This article has been written by Kumar Gaurav. This person is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their 'relative(s)' (as defined under Section 2(77) of the Firms Act, 2013) do not hold any financial interest in the businesses mentioned in this article as of the date of publication. For context, the views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/documented 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 create their investment decisions based on their own assessment. Brokerage disclaimers here.

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For now, why FPI selling may not be the story it looks remains the part of the story worth watching, and further updates are likely as more details are confirmed.