Foreign investor sell-off fuels sharp Nifty dip, analysts warn of tough October
Foreign investors dumped Indian equities in September, pushing the Nifty down about 6%, and analysts say a quick rebound is unlikely.
In September, foreign institutional investors reversed a two-month buying run and sold Indian stocks aggressively, adding to a year-long outflow that topped Rs 2.5 lakh crore, according to NSDL data. The sell-off helped the Nifty slide roughly 6%, marking its steepest September decline in eight years. Analysts cite the global backdrop—US Treasury yields above 5%, a firm dollar, higher crude oil and a softening rupee—as the main headwinds for India.
Domestic factors such as festival-season demand, government spending and the start of the earnings season may buoy large banks and select manufacturers, but they alone are unlikely to lure foreign capital back. A durable recovery, they say, will need at least two of those three drivers to improve, while liquidity can cushion downside if foreign selling persists.
Why it matters
The sharp foreign outflow and broader macro pressures could keep Indian markets volatile, affecting investors and the economy.
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