Foreign Investors Pull Out Rs 30,294 Crore in a Week as Domestic Funds Cushion Market Pressure

Foreign institutional investors (FIIs) continued their selling spree in Indian equities for the eighth consecutive week, offloading shares worth Rs 30,294 crore, while strong domestic institutional buying helped absorb the outflows and support a recovery in the market on Friday.

According to exchange data, domestic institutional investors (DIIs) purchased equities worth a net Rs 30,313 crore during the week, marginally exceeding foreign investors' selling. Analysts said sustained domestic inflows have played a crucial role in limiting the impact of persistent foreign fund withdrawals.

“Month-to-date, FIIs have sold a net Rs 39,779 crore against DII net buying of Rs 40,355 crore, with the Nifty down 0.44 per cent from its September-end close of 22,620.45,” said Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking.

The contrasting investment trends have continued over the past eight weeks, with foreign investors remaining net sellers and domestic institutions consistently buying equities. Despite the domestic support, the Nifty has declined 7.57 per cent from 24,366.00 to 22,520.45 over the period.

The sustained foreign selling was also evident in September, when foreign portfolio investors (FPIs) withdrew a net Rs 35,861 crore from Indian equities, reversing the trend seen in August, when they invested Rs 29,628 crore, according to a study by PL Capital (Prabhudas Lilladher).

The September outflows were spread across several sectors, including financial services, energy, automobiles and metals, with financial services bearing the brunt of the selling.

Financial services recorded the largest net outflow of Rs 13,147 crore, a sharp reversal from the Rs 10,494 crore in inflows recorded in August. The September withdrawal was also nearly six times the sector's long-term average monthly outflow of Rs 2,237 crore.

However, foreign investors continued to channel funds into select sectors, indicating that their selling has not been uniform across the market.

Consumer services attracted the highest inflows of Rs 2,333 crore in September, marking the sector's fourth consecutive month of positive foreign investment. Services followed with inflows of Rs 2,302 crore, while healthcare and construction received Rs 2,117 crore and Rs 1,311 crore, respectively, the PL Capital report said.

Despite these pockets of investment, cumulative sectoral FPI outflows for January to September 2026 stood at approximately Rs 2.60 lakh crore.

Mannat Gandhi, Research Analyst-Quant at PL Capital, said foreign investors continued to favour consumer services, services and healthcare, where inflows remained significantly above their long-term averages.

“The quarterly holding data tells a similar story over a longer horizon, with FII weightage gradually moving away from Banks and IT towards segments such as Electricals and Non-Ferrous Metals,” she said.

Looking ahead, analysts expect continued foreign selling and global economic headwinds to keep Indian equity markets volatile. However, sustained domestic institutional investment is expected to provide a cushion against further declines, even as investors monitor shifts in foreign fund allocation and broader market sentiment.