The Indian stock market has been experiencing heavy selling pressure since the beginning of October, driven by Foreign Portfolio Investors (FPIs) pulling out large sums. In just the first three trading sessions of the month, FPIs have sold equities worth ₹27,142 crore, according to data from the National Securities Depository Limited (NSDL).
The most significant sell-off occurred on October 4, when FPIs offloaded equities worth ₹15,506 crore, marking a sharp decline in investor confidence. This selling spree has weighed heavily on Indian equity markets, which have been under pressure for the last five sessions.
Experts point to a shift in foreign investor strategy as the primary reason for this sell-off. Many FPIs are moving their investments away from Indian stocks and redirecting funds to other Asian markets, such as China and Hong Kong, where they expect better returns. This sudden shift has turned FPIs into net sellers of Indian equities, contributing to the current market downturn.
“The selling has been mainly triggered by the outperformance of Chinese stocks. The Hang Seng index shot up by 26 percent in the last month, and this bullishness is expected to continue since the valuations of Chinese stocks are very low and the Chinese economy is expected to do well in response to the monetary and fiscal stimulus being implemented by the Chinese authorities,” said V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
He further added, “If the momentum in Chinese stocks continues, FIIs may continue to sell in India, where valuations are elevated. It remains to be seen how long the optimism lasts.”
Adding to these challenges, market analysts warn that if tensions in the Middle East escalate—particularly if there is any damage to oil fields in the region—global markets could face further volatility. Investors are advised to remain cautious in the coming weeks as global events unfold.
