New Delhi, October 11, 2026: India is witnessing an unusual split in foreign equity investment: overseas investors continued backing new share issues while selling far larger amounts of already-listed stocks. An October 8 JM Financial flow analysis, reported on October 9, estimates $9.2 billion in primary-market inflows and $39 billion in secondary-market outflows over the 12 months to September 2026.
Key Takeaways
- The reported 12-month primary-market inflow was $9.2 billion, against $39 billion of secondary-market selling.
- Foreign investors sold a net ₹39,660 crore of equities in September, according to the cited tracker.
- Domestic institutions bought approximately ₹76,030 crore in September.
- Primary-market demand does not guarantee strength in the wider stock market.
What the latest FII flow report shows
The September 2026 FII Monthly Flow Tracker from JM Financial, dated October 8 and reported by Financial Express on October 9, describes a sharp divergence between foreign money entering primary issues and money leaving shares traded on exchanges. Over 12 months, the report estimates approximately ₹85,500 crore of primary-market inflows against ₹3.65 lakh crore of secondary-market outflows. The two figures should not be combined casually without considering the reporting period and definitions. A primary-market transaction may include new issuance or other transactions, whereas secondary-market trades transfer existing listed shares. This is a market-flow analysis, not a forecast of future prices.
Why foreign investors may buy IPOs while selling stocks
There is no contradiction in an investor buying shares in one transaction and selling others. Funds evaluate valuation, sector exposure, liquidity and investment mandates separately. An IPO may offer access to a business not previously available on the stock exchange, while a fund may simultaneously reduce holdings in mature companies or rebalance its Indian allocation. Market uncertainty, global interest rates, currency movements and relative valuations can also influence decisions. The flow figures alone cannot establish a single motive for all foreign investors. Some institutions may participate in selected offerings while others sell in the broader market.
September 2026: the reported numbers
JM Financial’s tracker puts September net foreign equity selling at approximately ₹39,660 crore, while domestic institutional investors bought about ₹76,030 crore. The report states that the Nifty declined 6.1% in September after falling 1.2% in August. It also separates September primary-market inflows of around ₹9,310 crore from secondary-market outflows of around ₹48,970 crore. This distinction helps explain how foreign investors can appear active in IPO subscriptions even when their overall net equity exposure is shrinking. Different data providers can show provisional and final numbers at different times, so the timestamp and methodology matter.
Domestic institutions are a bigger counterweight
Domestic institutional investors include mutual funds, insurers and other Indian institutions that invest in listed equities. Their reported September purchases helped absorb part of the selling pressure from foreign funds. However, buying by one investor category does not ensure that a stock index rises: prices also reflect company earnings, global developments, liquidity and market expectations. JM Financial’s ownership analysis says domestic institutions had reached 18.9% ownership in June 2026 and held a greater aggregate share than foreign institutions. That shift reflects the growing importance of domestic pools of savings in the Indian equity market.
Foreign ownership and the long-term trend
The tracker reported that foreign institutional ownership of Indian equities fell to approximately 13.8% at the end of September 2026, from 14.2% in August and 19.9% a decade earlier. Ownership percentages can change because of trading flows, new issuance, index rebalancing and relative share-price performance. A lower ownership share is therefore not equivalent to the same percentage of shares being sold in one month. It is more useful to examine the trend alongside actual net flows, market capitalisation and changes in the composition of the market. The report also noted a rise in the relative influence of domestic institutions.
Which sectors saw the most selling?
According to the cited tracker, banking and financial services saw approximately $1.37 billion in September foreign outflows. Oil and gas followed with around $715 million, and automobiles with roughly $647 million. Telecom, metals, consumer businesses and power also recorded selling in the report. Pharmaceuticals and services were among the areas with modest positive foreign flows. Sector flows can be volatile, and one month does not establish a permanent change in investment preferences. Investors should compare flows with sector earnings, valuations and company-specific disclosures before treating them as a signal to buy or sell.
What does the Nifty decline mean?
A 6.1% monthly fall in the Nifty indicates broad pressure on large Indian equities during September, but it does not prove that foreign selling was the only cause. Global risk appetite, commodity prices, interest rates, currency movements and domestic earnings can all influence returns. The interaction matters: foreign outflows can add selling pressure, while domestic buying may reduce the impact without reversing the trend. Readers should distinguish correlation from causation when interpreting market reports. The September numbers are historical; they should not be used to claim that a particular index level will be reached in October.
Where to verify foreign investment data
Foreign portfolio investment information is published through the depositories and recognised market institutions. The National Securities Depository and Central Depository Services platforms provide reporting resources, while SEBI explains the regulatory framework and points users to depository data. Figures can differ between provisional exchange trading data and confirmed custodian-reported transactions. When publishing daily or monthly numbers, specify whether they are provisional, the asset class, the investment route and the cutoff date. The JM Financial analysis is an attributed interpretation of data; the depository and regulator remain useful primary sources for verification.
How retail investors should interpret the split
The central lesson is not that IPOs are always better than listed shares. Foreign investors may prefer particular new businesses at a given price while reducing exposure to other companies. Retail investors should examine valuation, earnings, cash flow, debt and governance for every investment. IPO subscription figures are demand indicators, not guarantees of listing gains. Equally, heavy FII selling does not automatically mean every listed company is overvalued or headed lower. Investors with long-term goals may find diversified asset allocation and disciplined risk management more useful than reacting to a single monthly flow statistic.
What to watch next
The next useful data points include October primary and secondary flows, domestic institutional purchases, corporate quarterly earnings and updated ownership figures. IPO fundraising may remain active even if the secondary market is volatile. A durable recovery would require more than a headline about one category of buyers; valuations, earnings expectations and macroeconomic conditions will also matter. EduTaxTuber readers should look for clearly dated data, distinguish investor categories and avoid extrapolating one month into a guaranteed market outcome. The latest report offers a revealing snapshot of India’s changing capital-market structure, not an investment recommendation.
Sources and Editorial Note
Sources: Financial Express reporting on JM Financial September tracker (October 9); NSDL foreign portfolio investor resources; CDSL foreign investment data.
Related EduTaxTuber articles: Market hub; IPO hub; Jio IPO report.
Disclaimer
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