Indian markets remain hesitant on Monday, October 12, 2026, as FIIs continue their 11-day selling streak. While domestic investors are buying to support the market, pressure from a weak rupee and high oil prices keeps the index range-bound. The Reserve Bank of India has intervened with a direct dollar-supply window for state-run oil companies to help stabilize the currency.
Indian stock markets opened with a flat trend on Monday, October 12, as a long streak of foreign selling continues to hold back gains. The Nifty 50 is moving sideways, caught in a tug-of-war between heavy selling by global investors and steady buying by local institutions. This marks the 11th consecutive session of net outflows from foreign institutional investors (FIIs).
For weeks, FIIs have been pulling money out of India at a steady pace. Data shows that cumulative foreign portfolio investment withdrawals have reached roughly ₹44,166 crore by early October. This trend is largely driven by attractive returns on US government bonds and a stronger dollar, which draws global money away from emerging markets. However, the market has not seen a sharp drop because domestic institutional investors (DIIs) are acting as a cushion, stepping in with significant daily purchases to absorb the selling pressure.
RBI Intervention in Currency Markets
The central bank is now taking active steps to manage the pressure on the Indian rupee, which has been hovering near the 96.73 level against the dollar. The Reserve Bank of India (RBI) has launched a direct dollar-supply window for state-run oil companies, including Indian Oil Corporation, HPCL, and BPCL. By providing dollars directly, the RBI aims to prevent these companies from buying dollars in the open market, a move that usually adds to the downward pressure on the rupee.
In another measure to reduce volatility, the RBI has tightened the rules for trading in rupee derivatives. The limit for exchange-traded rupee positions has been reduced to $5 million, a sharp drop from the previous $100 million cap. These actions are designed to stop speculators from betting heavily against the currency, as the regulator attempts to restore order in the foreign exchange market.
Global Factors Weighing on Sentiment
External factors remain the biggest worry for the market. Brent crude oil prices are stuck in a high range between $103 and $104 per barrel. This is a problem for India, as it increases the country's import bill and adds to inflation concerns. At the same time, the US 10-year Treasury yield is elevated at 5.24 per cent. When US bond yields are this high, global funds often prefer to invest in the US rather than emerging markets like India, creating a constant pressure on liquidity.
Investors may continue to monitor whether the current pace of FII selling shows signs of slowing down or if domestic buying remains strong enough to hold current levels. The effectiveness of the RBI's new dollar-supply measures in stabilizing the rupee and the direction of global oil prices will be the key factors determining market momentum in the coming sessions.