Foreign institutional investors (FIIs) remained net sellers in Indian equity markets for the eighth consecutive week, offloading a net ₹30,294 crore in the week ended 10 October 2026, according to exchange data. The relentless outflow, however, was fully neutralised by domestic institutional investors, keeping broader market damage in check.

DIIs Step Up to Absorb FII Selling

Domestic institutional investors (DIIs) extended their own buying streak, recording net purchases of ₹30,313 crore in the same period — marginally exceeding FII outflows and enabling a partial Friday pullback, analysts noted. The near-perfect offset underscores a structural shift in market dynamics, where domestic capital has emerged as a credible counterweight to foreign selling pressure.

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

Eight Weeks of Sustained Pressure on the Nifty

Over the past eight weeks, FIIs were net sellers in every single session, while DIIs consistently absorbed the supply. Despite this domestic cushion, the Nifty has still slid 7.57 per cent — from 24,366.00 to 22,520.45 — reflecting the scale and persistence of foreign outflows. This is the longest unbroken FII selling streak in recent memory for Indian markets.

September FPI Outflows: Financials Bear the Brunt

Foreign portfolio investors (FPIs) withdrew a net ₹35,861 crore from Indian equities in September 2026, a sharp reversal from net inflows of ₹29,628 crore in August 2026, according to a study by PL Capital (Prabhudas Lilladher). Selling in September was broad-based, spanning financials, energy, automobiles, and metals.

Financial Services recorded the largest sectoral outflow at ₹13,147 crore — a dramatic reversal from inflows of ₹10,494 crore in August, and nearly six times the sector's long-term average (LTA) monthly outflow of ₹2,237 crore. The scale of the swing points to a deliberate reallocation rather than routine profit-booking.

A Few Sectors Still Attracting Foreign Capital

Not all sectors faced FPI retreat. Consumer Services recorded the highest inflow at ₹2,333 crore, marking its fourth straight month of positive foreign flows. Services followed with ₹2,302 crore, Healthcare with ₹2,117 crore, and Construction with ₹1,311 crore, according to the PL Capital report.

Mannat Gandhi, research analyst–Quant at PL Capital, noted that 'foreign investors continued to add to Consumer Services, Services and Healthcare, where flows remain well above long-term averages.' She added: '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.'

Year-to-Date Picture and the Road Ahead

On a year-to-date basis, cumulative FPI outflows from January to September 2026 stood at approximately ₹2.60 lakh crore — a figure that reflects the sustained global risk-off sentiment weighing on emerging markets, including India. This comes amid broader headwinds from elevated global interest rates, geopolitical uncertainty, and a resilient US dollar.

Analysts expect FII selling and global headwinds to keep markets volatile in the near term. However, record domestic institutional buying is seen as a structural support that should continue to limit the downside. The key question is how long retail and institutional domestic capital can sustain this buffer if foreign outflows intensify further.