FPI selling to slow down amid improved earnings, attractive valuation

New Delhi, Oct 4 With the valuation differential coming down and Indian earnings likely to improve in FY27, foreign portfolio investors (FPIs) are likely to slow down selling going forward, analysts said on Saturday.

Sustained FPI selling continued in September with the sell figure through exchanges touching Rs 27,163 crore.

However, in keeping with the long-term trend of buying through the primary market, they bought equity for Rs 3,278 crore in September.

“The selling in September takes the total sell figure for 2025 to Rs 198,103 crore. This massive selling on top of the Rs 121,210 crore selling in 2024 takes the total FII selling to Rs 319,313 crores for the last 21 months,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Higher valuation in India and cheaper valuations elsewhere have been the principal drivers behind the FII strategy.

According to analysts, the market enters the new week with cautious optimism.

The RBI’s supportive policy stance and strong GST collections offer domestic comfort, though volatility could persist due to FII outflows and global headwinds. Investors should closely track Q2 earnings, particularly from IT and banking heavyweights, for cues on sectoral leadership.

“A buy-on-dips strategy remains advisable, with a preference for domestic cyclicals such as metals, autos, financials, and themes like defence, while selectively adding from other sectors. Broader markets should be approached carefully, with a focus on fundamentally sound companies. Traders should also keep a close watch on global developments, especially US macro data and FOMC minutes, which could influence near-term sentiment,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.

The coming week will be pivotal as the Q2 FY26 earnings season gets underway, with IT bellwether TCS scheduled to announce results on October 9. On the macroeconomic front, the release of HSBC Services and Composite PMI, along with banking sector data on loan and deposit growth, will be closely monitored.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor