Foreign portfolio investors sold a net INR 34,843 crore (INR 348.43 billion) of Indian equities in October, their second straight month of heavy selling, according to depository data reported by the Free Press Journal. India's stock benchmarks rose anyway: the Nifty 50 gained 1.9% in the month and the Sensex added 2.7%, as domestic money absorbed the supply.

For investors across Asia, the split matters. Foreign funds have spent most of 2026 moving money out of India and into the artificial intelligence and chip trade in Taiwan, South Korea and the U.S., while Indian pension, insurance and mutual-fund money has kept buying. October showed the domestic side can still lift prices on its own, and the last week of the month brought the first sign of foreign buyers coming back.

Foreign Selling Slows in the Final Week

The monthly figure hides a sharp turn. By Oct. 12, foreign investors had already sold INR 47,417 crore of Indian shares, Business Standard reported, citing data from National Securities Depository Ltd. (NSDL). That pace would have made October one of the year's worst months.

It eased. Foreign funds bought about INR 6,300 crore of Indian shares in the week of Oct. 26 to 30 and were net buyers in three of the four sessions that ended Oct. 30, the Free Press Journal reported. The week before, they had sold close to INR 2,700 crore.

September's outflow was INR 35,861 crore, so October's total came in slightly lower. Foreign investors had been buyers in the summer, putting INR 20,200 crore into Indian equities in July and INR 29,631 crore in August.

The full-year picture is still heavy. Net foreign selling in 2026 reached about INR 2.95 trillion after October, according to the Free Press Journal. In mid-October, Business Standard put the year's net selling at INR 3.08 trillion, about 1.85 times the INR 1.66 trillion outflow in all of 2025. The two outlets use different cut-off dates and depository data, which accounts for part of the gap. Secondary-market sales alone reached INR 3.64 trillion through Oct. 12, partly offset by INR 56,485 crore of foreign buying in initial share sales, according to Business Standard.

Why Foreign Funds Have Been Selling India

Analysts quoted by both outlets point to forces mostly outside India. The U.S. 10-year Treasury yield moved above 5.2% in October, giving global investors a high return on safe assets, said V.K. Vijayakumar, chief investment strategist at Geojit Investments. Brent crude tested $100 a barrel, Business Standard reported, a direct cost for an economy that imports most of its oil.

Jignesh Desai, chief executive of institutional equities at Centrum Broking, told Business Standard that global money is chasing the AI and semiconductor trade in the U.S., Taiwan and Korea, and that India is effectively funding those positions. He also cited a weak rupee, which cuts dollar returns, and valuations that look rich relative to earnings growth. Steady monthly inflows into Indian mutual funds through systematic investment plans make it easy for foreign holders to sell in size without crashing prices, he said.

Those domestic flows are large. Domestic institutional investors bought a net INR 6.83 trillion of Indian shares in 2026 up to mid-October, Business Standard reported, after INR 7.88 trillion in 2025.

The late-October change has its own explanations. Vijayakumar cited the Federal Reserve's decision to hold rates, more reasonable valuations among large companies and India's growth outlook, according to the Free Press Journal. Anand K. Rathi, co-founder of MIRA Money, said lasting inflows would need calmer global conditions, stable oil prices and clearer earnings visibility. Pabitro Mukherjee of Bajaj Broking said oil and geopolitical risks could limit the rebound.

Foreign buyers favored pharmaceutical, health care and digital platform stocks and cut exposure to large lenders, the Free Press Journal reported. The rupee firmed slightly over the month, at about 95.15 per U.S. dollar on Oct. 30 against about 95.93 at the end of September, according to Yahoo Finance data. The Reserve Bank of India's defense of the rupee has shrunk the banking system's cash surplus.

Nifty and Sensex Still Down for 2026

October's gains came off a low base. The Nifty 50 closed at 23,053.10 on Oct. 30, up from 22,620.45 at the end of September, and moved back above the 23,000 level. The Sensex ended the month at 74,459.53, compared with 72,480.29 a month earlier.

Both indexes remain well below where they started the year. As of mid-October the Sensex was down 15.6% in 2026 and the Nifty 50 was down 14.4%, according to Business Standard. Some newer listings have done better: Jio Platforms rose about 27% on its market debut, and foreign funds have been more willing to buy new issues than existing shares.

Desai told Business Standard he expects foreign selling to slow over the next 12 months. A full reversal, he said, would likely need the AI trade to cool, the rupee to stabilize as oil eases and India's current account deficit to narrow, with a trade agreement between the U.S. and India and U.S. rate cuts as further help.

The first test comes this week. Weekly depository data published over the coming weekend will show whether foreign funds kept buying in the first days of November, and the U.S. midterm elections are among the global events analysts told the Free Press Journal they are watching.