On Thursday, foreign investors sold another $1.34 billion worth of shares, their biggest single-day outflow since May 29, when they sold $2.3 billion worth of equities.
The increased selling was driven by block deals in ITC, where global investor GQG Partners offloaded around a 3% stake for about ₹9,400 crore.
Meanwhile, Fidelity Advisor Overseas Fund bought a little over a 1% stake in ITC for ₹3,448 crore. Domestic institutional investors also stepped in, with ICICI Prudential Mutual Fund and SBI Mutual Fund buying equities worth ₹2,419 crore and ₹968 crore, respectively.
Yet, the decline in Indian equities has remained relatively contained compared with previous sell-offs, as domestic institutional investors (DIIs) have continued to absorb foreign selling.
According to Bloomberg data, overseas investors sold about $35 billion worth of Indian shares during the Covid-driven sell-off that ended in June 2022, while outflows during the global financial crisis stood at around $16 billion.
The benchmark Nifty 50 plunged 40% in just two months during the Covid-19 sell-off, while the index declined about 60% during the global financial crisis in 2008. By comparison, the Nifty 50 has fallen only 14% since September 2024, when FPI selling accelerated and eventually reached $63 billion.
One key reason the market has held up despite the FPI exodus is strong buying by domestic institutional investors. DIIs have purchased more than $180 billion worth of shares during the same period — roughly three times the amount sold by FPIs.
The selling has been concentrated in financials and technology, while industrials, metals and mining, and utilities have continued to attract inflows.
The heavy selling by overseas investors has also weighed on the Indian rupee. The currency has depreciated as much as 7.1% since the start of the year, while elevated crude prices, higher global yields and a stronger dollar have further dented sentiment.
Meanwhile, Brent crude surged 5.3% on Thursday to cross $105 a barrel, marking its biggest single-day gain in nearly a month.
“Crude prices continue to be the biggest talking point for global investors from an Indian market perspective. FIIs are exploring bottom-up themes, but there is no clear indication of significant flows into Indian markets,” said Gautam Chhaochharia, Head of Global Markets at UBS.
He added that concerns around the AI trade and India have started to ease.
The sustained selling has also reduced overseas investors’ ownership of Indian equities to below $700 billion. At the end of September, their holdings stood at $689.41 billion, accounting for 14.5% of the Indian equity market.