FPIs Sell Rs 45,536 Crore In September, Large-Cap Valuations Turn Attractive After Market Slide

In September, foreign portfolio investors (FPIs) sold equities worth Rs 45,536 crore, as higher US bond yields and concerns over elevated crude prices dampened sentiment, according to wire material. However, they also invested Rs 9,676 crore in the primary market, indicating continued interest in certain opportunities. This selling trend has negatively impacted Indian shares, although it has made valuations of large-cap companies more appealing, as per market experts.

The US bond yield rose above 5.2%, exacerbating pressure on Indian equities. Additionally, worries about the potential persistence of high crude prices further weighed on foreign investors. Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, stated that persistent foreign selling had weakened the market, which has experienced eight consecutive weeks of losses, and noted that rainfall 13% below normal also contributed to market sentiment.

Analysts emphasized that a lasting reversal in foreign selling would necessitate positive developments, including lower crude prices and reduced US bond yields. In the last week of September, foreign selling intensified and continued into October, with provisional equity selling amounting to around Rs 34,965 crore from September 28 to October 1, and settled selling for the same period was approximately Rs 27,962 crore.

While foreign selling increased, domestic investors countered with a Rs 11,232 crore infusion, according to Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth. Gaur remarked that primary market investments alongside secondary market selling indicated that foreign investors were becoming more selective in deploying funds in India.

Domestic institutional investors bought Rs 76,030 crore in cash equities during September, according to NSE data, providing support against the foreign selloff. Despite sustained buying by domestic investors and retail investors, the market has managed to avoid a sharper decline. Going forward, the focus will shift to companies' second quarter of FY27 results, as strong earnings and positive management commentary could attract buyers, even as global developments continue to influence foreign investment flows in the weeks ahead.