In October, foreign portfolio investors pulled ₹38,513 crore from secondary Indian equities but invested ₹12,902 crore into primary market offerings, hitting a 15-month high. Domestic institutional investors provided a vital buffer against this exodus, buying ₹62,220 crore worth of shares.
Foreign portfolio investors (FPIs) are adopting a two-pronged strategy toward Indian equities. While they have been aggressive sellers in the secondary market—where existing shares are traded—they are showing a strong appetite for the primary market, which includes new share issues like initial public offerings (IPOs). Data from the National Securities Depository Ltd shows that FPIs funneled ₹12,902 crore into primary market offerings in October, the highest inflow seen since July 2025.
The Shift from Secondary Markets
This interest in fresh listings stands in sharp contrast to the exit from established stocks. During October, FPIs sold shares worth ₹38,513 crore in the secondary market. This trend adds to the selling pressure seen throughout the year, with total net selling by overseas investors reaching ₹2.87 trillion year-to-date. This ongoing liquidation has created a supply of shares that often weighs on stock indices, as FPIs typically hold a large portion of the float in many major Indian companies.
The Role of Domestic Buyers
Domestic institutional investors (DIIs), which include mutual funds, insurance companies, and banks, have become the primary support system for the Indian market. In October alone, DIIs purchased ₹62,220 crore worth of shares. This domestic buying power has helped absorb the selling pressure from FPIs, preventing steeper falls that might have occurred if the market relied solely on foreign capital.
Why Global Investors Are Moving Capital
Several global macroeconomic factors are driving this change in investor behavior. Rising bond yields in the United States have made dollar-denominated assets more attractive, leading to capital moving away from emerging markets. Additionally, the disruption of the yen carry trade—where investors borrow in low-interest Japanese yen to invest in higher-yield assets—has reduced available liquidity for global participants due to rising Japanese bond yields.
Locally, the market is also dealing with challenges such as persistent commodity price inflation and global supply chain issues, which can put pressure on corporate profit margins. These factors have led international investors to be more cautious.
Debt Market Movements
It is not just equity markets seeing this shift. FPIs have also reduced their exposure to Indian government securities, which are often classified under the fully accessible route. For two consecutive months, foreign investors have been net sellers in this space, offloading ₹5,609 crore in October. Geopolitical tensions and high crude oil prices have prompted these investors to trim their holdings in sovereign debt as they navigate a complex global environment. For investors, the key monitorable remains the balance between steady domestic buying and the volume of foreign selling as global interest rates and commodity trends continue to fluctuate.