Foreign investors have withdrawn ₹48,056 crore from Indian equities in October so far, amid elevated crude oil prices, escalating West Asia tensions, concerns over inflation and weak corporate earnings.

However, Foreign Portfolio Investors (FPIs) significantly moderated their selling last week and turned net buyers on two trading days, signalling some easing in selling pressure.

The latest outflows follow net withdrawals of ₹35,861 crore in September.

FPIs had invested ₹20,200 crore in Indian equities in July and ₹29,631 crore in August, according to data from the Central Depository Services Ltd (CDSL).

With the latest withdrawals, cumulative FPI outflows from Indian equities in 2026 have reached ₹3.08 lakh crore, substantially exceeding the ₹1.66 lakh crore withdrawn during the entire year 2025, the data showed.

Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, said FPI selling was driven by elevated crude oil prices, which surged to around $114 per barrel amid West Asia tensions, weak corporate earnings, inflation concerns and uncertainty over domestic liquidity conditions.

The ₹30,213-crore Jio Platforms IPO also temporarily absorbed market liquidity, while global portfolio reallocations added to the pressure on Indian equities.

According to Anand K. Rathi, Co-Founder of MIRA Money, FPIs have continued to withdraw funds amid persistently high crude oil prices and concerns over the earnings outlook.

While second-quarter results have been relatively strong, higher oil and logistics costs could weigh on corporate earnings growth in the coming quarters.

Elevated U.S. interest rates have also continued to make American assets attractive, while steady inflows from domestic institutional investors and systematic investment plans (SIPs) have helped cushion the selling pressure, he added.

Interestingly, FPIs significantly reduced their selling in the week ended October 23 and turned net buyers on two days.

V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., attributed the moderation in selling to a decline in U.S. bond yields, with the 10-year yield easing from 5.36% to around 5%, the rupee's appreciation to 94.94 against the U.S. dollar, and attractive valuations, particularly among large-cap stocks.

Vedant Gupte, Co-Founder and CEO of investment platform Trackk, said the scale of the outflows appeared less alarming than it might suggest, given that foreign ownership of Indian equities was already at multi-year lows and domestic investors accounted for a larger share of the market.

He added that foreign investments through IPOs indicated that the selling could reflect a rotation out of existing holdings rather than a loss of confidence in India.

Meanwhile, foreign investors remained net sellers in the Indian debt market in October so far. They withdrew ₹3,858 crore through the Fully Accessible Route (FAR) and ₹1,332 crore through the Voluntary Retention Route (VRR), while investing ₹3,737 crore through the general route.

Going ahead, the moderation in FPI selling offers some relief, although elevated crude oil prices and broad-based weakness in the equity market continue to pose downside risks.

Market participants will closely track the U.S. Federal Reserve's Federal Open Market Committee (FOMC) policy decision and the Bank of Japan's interest rate decision in the coming week, said Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking.

On the domestic and global macroeconomic front, U.S. gross domestic product (GDP) data will be a key focus. Movements in Brent crude prices, developments in the U.S.-Iran and Russia-Ukraine conflicts, and the ongoing corporate earnings season will also influence investor sentiment, he added.