Market Analysis · November 2
Foreign Selling Is Slowing and Five Triggers Are Lining Up for Indian Markets
November 2, 2026 · 9 min read · Updated November 2, 2026
For most of 2026 the story of Indian markets has been the same sentence: foreign investors sold, domestic investors bought, and the Nifty went nowhere. In the last week of October that sentence changed. Foreign institutional investors turned net buyers for the first time in eleven weeks, while valuations, bond yields and crude oil all moved in a friendlier direction. This piece looks at the trend in foreign flows, the five things that have shifted, and, just as important, what has not.
Why does the market look compressed? The Nifty is about 12% below its September 2024 closing high, it trades below its ten year median valuation, and it has absorbed about Rs 4.5 lakh crore of foreign selling this year and still holds 23,000. When a market has taken in that much pressure, fewer sellers remain, and smaller pieces of good news can have a bigger effect. That is an observation about conditions, not a forecast that prices will rise.
1. The Trend: Selling Peaked in March and Has Been Fading
On provisional NSE cash market data, foreign investors sold Indian shares in every month of 2026, with the heaviest selling in March at about Rs 1.23 lakh crore. The pace then eased through April, May and June, and nearly stopped in July and August, when selling fell to under Rs 8,000 crore a month. It returned in September and October, at roughly Rs 44,000 crore to Rs 45,000 crore a month, against a backdrop of rising oil and a Fed hike in September. Domestic institutions bought more than foreign investors sold in nine of the ten months, which is why the Nifty held up.
| Month (2026) | FII net | DII net |
|---|---|---|
| January | Sold Rs 41,435 Cr | Bought Rs 69,221 Cr |
| February | Sold Rs 6,641 Cr | Bought Rs 38,423 Cr |
| March | Sold Rs 1,22,540 Cr | Bought Rs 1,42,960 Cr |
| April | Sold Rs 70,135 Cr | Bought Rs 51,064 Cr |
| May | Sold Rs 55,963 Cr | Bought Rs 82,669 Cr |
| June | Sold Rs 49,029 Cr | Bought Rs 85,800 Cr |
| July | Sold Rs 5,779 Cr | Bought Rs 35,099 Cr |
| August | Sold Rs 7,532 Cr | Bought Rs 58,268 Cr |
| September | Sold Rs 44,013 Cr | Bought Rs 76,030 Cr |
| October | Sold Rs 45,162 Cr | Bought Rs 62,220 Cr |
Provisional exchange cash market data. For the year to October 30, foreign investors have net sold roughly Rs 4.5 lakh crore and domestic institutions have net bought roughly Rs 7 lakh crore. Depository data, which includes IPO and QIP money, shows a smaller foreign outflow and sometimes inflows in months where exchange data shows selling, so the two series should not be mixed.
The more useful picture is October week by week. The selling did not just stop, it faded, and then reversed.
| Week | FII net | Comment |
|---|---|---|
| Oct 1 to 10 | Sold about Rs 39,800 Cr | Heaviest selling of the month, including about Rs 12,900 Cr on October 8 |
| Oct 12 to 17 | Sold about Rs 9,000 Cr | Selling slows sharply |
| Oct 19 to 24 | Sold about Rs 2,700 Cr | Tenth straight week of net selling, but the smallest |
| Oct 26 to 30 | Bought about Rs 6,300 Cr | First net buying week after ten of selling |
The week of October 26 to 30 also had a clear rhythm: foreign investors bought on three of the five days, with a large Tuesday and a large Friday, while domestic institutions kept buying on most days, including on the days foreign investors sold. Reports say the foreign money went into pharma, healthcare and digital platform names, while large financials were trimmed.
| Day | FII net | DII net |
|---|---|---|
| Mon, Oct 26 | Sold Rs 1,462 Cr | Bought Rs 2,610 Cr |
| Tue, Oct 27 | Bought Rs 4,240 Cr | Sold Rs 1,250 Cr |
| Wed, Oct 28 | Bought Rs 872 Cr | Bought Rs 643 Cr |
| Thu, Oct 29 | Sold Rs 944 Cr | Bought Rs 1,924 Cr |
| Fri, Oct 30 | Bought Rs 3,599 Cr | Sold Rs 818 Cr |
Investor Lens: Read flows as a thermometer, not a steering wheel. Three weeks of improvement is worth noting, and it is still a short record. The better habit is a plan that does not depend on who is buying this week.
2. Valuations Are Below Their Ten Year Median
At the October 30 close the Nifty 50 traded at about 19.3 times trailing earnings. Its ten year median is about 23.2, so the market is roughly 17% below that level, and about 12% below its five year median. On forward earnings the multiple was about 17.2 in September, and one brokerage described the valuation adjusted for growth as nearing its most attractive zone in roughly a decade. Foreign investors compare India with other markets, and a lower multiple makes the comparison less uncomfortable.
| Measure | Level |
|---|---|
| Nifty 50 trailing PE (Oct 30) | About 19.3 |
| Ten year median PE | About 23.2 (current is about 17% below) |
| Five year median PE | About 21.9 (current is about 12% below) |
| 12 month forward PE (September) | About 17.2 |
| Nifty vs September 2024 closing high | About 12% below 26,179 |
A word of caution. These are medians of past multiples, and a market can trade below its median for a long time, particularly if earnings estimates are cut or rates stay high. A low multiple is a starting condition that makes future returns more attractive on average, not a signal for a date or a level.
Investor Lens: Valuation is most useful for deciding how steadily to invest, not when. If your SIPs are running, you are already buying across valuation levels. Our piece on fear, greed and Nifty valuations explains how to use this without trying to call the bottom.
3. US Bond Yields Are Cooling Off
The US 10 year Treasury yield was about 4.93% on November 2, near a seven week low and about 40 basis points below its early October level of roughly 5.36%. It fell as technology stocks sold off and some investors moved into bonds, and as the Fed held rates on October 28 after its September hike. For India this matters in two ways: lower yields reduce the pull of dollar assets, and they ease pressure on the rupee, which has been near 95 to the dollar.
The caveat is that US inflation is still elevated, growth is strong, and markets still price a good chance of another Fed hike in December. The jobs report on Friday, November 6, is the next test.
Investor Lens: Falling US yields help equities and long bond funds, while rising yields do the opposite. A plan that matches your debt allocation to your time horizon, as set out in our equity and debt mix guide, copes with either direction.
4. Crude Has Come Off Its Peak
Brent reached a four year high of about $116.7 on October 23, and the expiring contract traded near $117 to $118 on October 30 after a tanker incident in the Strait of Hormuz. On Monday, November 2, it eased to about $110, down about 3% on the day, on signs that Middle East diplomacy would get more time and with OPEC plus holding output targets through December. For India, which imports most of its crude, every step down helps inflation, the rupee and margins for fuel intensive businesses.
This is the trigger most open to reversal. Brent is still well above where it started October, and the driver is geopolitical, which means headlines can move it in either direction within a day.
Investor Lens: Oil is the clearest example of a risk you cannot forecast and can only prepare for. Keep an emergency fund in safe assets and do not borrow to invest. Our guide to not reacting to market moves covers how to stay steady when headlines swing.
5. IT Is Bouncing Back
The Nifty IT index rose about 17.7% in October, its best month in more than six years. Among Nifty stocks, TCS gained about 22%, Infosys 19.2%, Tech Mahindra 17.5% and HCLTech 16.1% for the month, and the index added another 2.3% on Friday after US IT services results. The rebound followed strong deal wins and AI related revenue at the large companies, though guidance remains cautious.
Investor Lens: After a 17% month it is normal for a sector to pause. If IT is a large share of your holdings, check whether the rebound has pushed it above the weight you intended, and rebalance if it has.
6. Q2 Results Are Coming In Better Than Feared
Reliance Industries is the most visible example. It reported record quarterly numbers on October 30: revenue of about Rs 3.62 lakh crore, up about 28%, and profit after tax of about Rs 29,550 crore, up about 34%, with profit attributable to shareholders of about Rs 25,548 crore, up about 40%. Consolidated EBITDA was about 6% above one brokerage's estimate, led by the oil to chemicals business, and the shares rose as much as about 7% in early trade on Monday, the sharpest intraday gain in nearly three years. L&T's profit rose about 26%, Bajaj Auto's about 62% and ICICI Bank's about 20% in the same results season. Before the season, brokerages expected Nifty 50 profit to grow about 25%, the best in twelve quarters.
The picture is not uniform. Reliance Retail's EBITDA fell about 9% to 11%, Maruti's profit fell despite higher revenue, and a results tracker covering more than 680 stocks shows the median stock down about 3% since results, so the market is rewarding standouts rather than everything. Figures come from secondary summaries and some headline numbers differ between reports, so please check them against company filings.
| Trigger | What changed | What could reverse it |
|---|---|---|
| Valuation | Nifty trailing PE about 19.3 against a ten year median of about 23.2 (17% lower) | Low multiples can stay low if earnings estimates fall |
| US bond yields | 10 year yield about 4.93%, a seven week low, about 40 bps below early October | Markets still price a good chance of a December Fed hike |
| Crude oil | Brent about $110 on Nov 2, down from $117 to $118 on the expiring contract on Oct 30 | Still higher than at the start of October |
| IT sector | Nifty IT up 17.7% in October, its best month in over six years | A sharp rebound can be followed by pauses |
| Q2 results | Reliance record quarter and a 6% EBITDA beat on one brokerage's estimate; L&T, Bajaj Auto, ICICI Bank strong | Retail at Reliance missed, Maruti profit fell, median post result stock move was negative |
Investor Lens: Index level earnings can look fine while individual companies disappoint, as the retail miss at Reliance shows. A diversified fund absorbs one company's miss far better than a single stock does, and our results season guide explains the checks to make.
What Has Not Changed
- Foreign investors have net sold about Rs 4.5 lakh crore this year, and one week of buying does not undo that.
- Breadth is narrow. In October, the Nifty Midcap 100 fell about 3.4% and the Smallcap 100 about 4.2% even as the Nifty rose about 1.9%, and only nine of 16 major sectors rose.
- The Fed may still raise rates in December, and oil remains well above its September level.
- Q2 earnings growth benefits partly from a soft base, and some brokerages trimmed Reliance's price target even as they raised earnings estimates.
The Takeaway
Better Conditions, Not a Guarantee
Five things have shifted in the same direction: valuations are below their median, US yields and crude have eased from their peaks, IT has recovered, and Q2 results from the large companies have been better than feared. Foreign selling has faded for three weeks and turned to buying in the last one. That is an improving set of conditions for Indian equities, and it makes more sense to review a plan than to abandon one. It does not tell us when or how far markets will move, and a single headline on oil or the Fed can change the week. The practical response is the same as always: keep SIPs running, stagger new money, hold a proper emergency fund, and check your allocation. Our goal based planning guide and rebalancing and fund overlap piece show how to do that calmly.
Quick Questions
Are foreign investors coming back to Indian equities?
There are early signs. Foreign institutional investors were net buyers of about Rs 6,300 crore between October 26 and 30, 2026, the first net buying week after ten straight weeks of net selling, based on provisional exchange data. One week is not a trend. Foreign investors have still sold about Rs 4.5 lakh crore of Indian shares in 2026, so confirmation would need several more weeks of buying.
How much have FIIs sold in Indian equities in 2026?
On provisional NSE cash market data, foreign institutional investors have net sold roughly Rs 4.5 lakh crore of Indian shares in 2026 up to October 30, while domestic institutions have net bought roughly Rs 7 lakh crore. Depository data, which also counts IPO and QIP money, shows a smaller outflow of about Rs 3 lakh crore, and the two series should not be mixed. Figures are provisional and can be revised.
Is the Nifty cheap compared with its history?
On October 30, 2026 the Nifty 50 traded at about 19.3 times trailing earnings, against a ten year median of about 23.2 and a five year median of about 21.9, roughly 17% and 12% below those medians. The 12 month forward multiple was about 17.2 times in September. A multiple below its median does not mean the market will rise, since earnings estimates can change and valuations can stay low for long periods.
Why do falling US bond yields matter for India?
When US Treasury yields fall, dollar assets pay less, which can make emerging markets such as India more attractive and ease pressure on the rupee. The US 10 year yield was about 4.93% on November 2, 2026, near a seven week low and about 40 basis points below its early October level near 5.36%. Markets still price a good chance of a Fed hike in December, so yields can move back up.
How does crude oil affect Indian markets?
India imports most of its crude, so higher prices raise the import bill, push up inflation, pressure the rupee and squeeze margins in fuel intensive businesses. Brent touched a four year high near $116.7 on October 23, 2026, and the expiring contract traded near $117 to $118 on October 30, before easing to about $110 on November 2 on hopes of Middle East diplomacy. That is still well above where it began October, so it remains a risk.
Did Q2 FY27 results beat expectations?
In pockets, yes. Reliance Industries reported record quarterly numbers, with consolidated EBITDA about 6% above one brokerage's estimate, and L&T, Bajaj Auto and ICICI Bank posted strong profit growth. Overall the picture is mixed: retail EBITDA at Reliance missed, Maruti's profit fell despite higher revenue, and several stocks fell after results. Look at why a profit moved, not only the headline.
Should I change my investments based on FII flows?
For long term goals, flows are a reason to understand the market, not to change a plan. Keep SIPs running, review your allocation on a schedule, and avoid trying to time entries around one week of data. This is general guidance, not personal advice, and a financial planner can check how it applies to your goals.
This article is for general informational purposes only and does not constitute investment advice. Mutual fund investments are subject to market risk. Please read all scheme related documents carefully before investing. Past performance is not indicative of future returns. Market data, flows, valuation multiples and company results discussed above are sourced from public reporting as available at the time of writing, some of it provisional or from secondary summaries, and are illustrative, not a forecast or a guarantee of future returns. Companies are named only as examples of reported news. SampadaSarathi (Inderpreet Singh) is an AMFI Registered Mutual Fund Distributor (ARN-357884) and an IRDAI-licensed POSP (Life: POSPL74320, Non-Life/Health: POSPN74320) operating through NJ Insurance Brokers Private Limited. For grievance redressal, refer to AMFI or SEBI SCORES. Commentary on individual stocks, sectors, and companies is general market observation, not a recommendation to buy, sell, or hold any specific security.