FPIs may ease selling as India’s earnings outlook brightens for FY27

New Delhi: With valuation gaps narrowing and Indian corporate earnings expected to improve in FY27, foreign portfolio investors (FPIs) are likely to slow their selling in the coming months, analysts said on Saturday.

FPI outflows continued in September, with net sales through exchanges reaching ₹27,163 crore. However, in line with their long-term trend of buying via the primary market, FPIs purchased equities worth ₹3,278 crore during the month.

"The sales in September take the total sales 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 at Geojit Financial Services.

Higher valuations in India compared with cheaper opportunities elsewhere have been the main factor driving the FPI strategy, analysts noted.

As markets enter a new week, sentiment remains cautiously optimistic. The Reserve Bank of India’s supportive policy stance and robust GST collections continue to provide domestic comfort, although volatility may persist due to foreign outflows and global headwinds.

“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, Senior Vice-President – Research, Religare Broking Ltd.

He added that traders should also keep an eye on global cues, especially US macroeconomic data and the upcoming Federal Open Market Committee (FOMC) minutes, which could influence near-term sentiment.

The coming week will be crucial as the Q2 FY26 earnings season begins, with IT major TCS set to announce results on October 9. On the macroeconomic front, the release of the HSBC Services and Composite PMI, along with banking sector data on loan and deposit growth, will also be closely tracked.

IANS