Nifty Down Nearly 13% in 2026 as FII Selling Intensifies in September

Foreign investors stepped up their exit from Indian equities in September, with selling gathering pace dramatically in the final few sessions of the month. The pressure has added to what has already been a difficult year for the stock market, leaving the Nifty nearly 13% lower in 2026 so far. 

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Foreign institutional investors (FIIs) sold a net Rs 44,013 crore worth of Indian equities during September. That amounts to roughly 11% of their total net selling of around Rs 4.03 lakh crore so far this year. 

What stood out was how quickly the selling intensified towards the end of the month. Nearly Rs 29,175 crore — about two-thirds of September’s total FII outflow — came during the final four trading sessions alone. 

September 30 Sees Biggest FII Sell-Off in Nearly Six Months 

The selling peaked on September 30, when FIIs pulled out Rs 10,148 crore from Indian equities. 

It was their largest single-day outflow since March 23, when foreign investors had sold around Rs 10,414 crore. 

The preceding sessions had already shown signs of mounting pressure. FIIs sold Rs 3,694 crore on September 25, followed by Rs 5,353 crore on September 28 and Rs 9,980 crore on September 29. 

Overall, foreign investors were net sellers in 16 of September’s 21 trading sessions. 

Nifty Loses 6.1% in September 

The heavy selling came at a time when the market’s earlier recovery was beginning to lose momentum. 

After falling sharply in the first quarter of 2026, the Nifty recovered during April-June and gained around 2% in July. September reversed much of that optimism. 

The index ended the month at 22,620.45, down 6.1%, marking its weakest September performance since 2018. 

That has taken the Nifty’s decline for 2026 so far to nearly 13%. The Sensex, meanwhile, is down around 15% year-to-date. 

September also saw some sharp single-session declines, including a 1.56% fall in the Nifty on September 28. 

Domestic Investors Continue Buying 

While foreign investors headed for the exit, domestic institutions remained firmly on the other side of the trade. 

Domestic institutional investors (DIIs) were net buyers during every trading session in September, purchasing equities worth Rs 76,030 crore during the month. 

Their buying exceeded the month’s FII selling and kept combined institutional flows positive. 

The contrast was particularly visible on September 30. While FIIs sold Rs 10,148 crore, domestic institutions purchased Rs 11,272 crore worth of equities. 

SIP Flows Continue to Support Domestic Buying 

Akshat Garg, Head of Research & Product at Choice Wealth, pointed to the growing role of systematic investment plans in supporting domestic flows. 

August saw record SIP inflows of Rs 32,297 crore, while the number of contributing SIP accounts crossed 10 crore. 

Foreign investors also sold nearly Rs 14,500 crore worth of index futures during the September series, according to Garg. 

Vipul Bhowar, Executive Director and Head of Equities at Waterfield Advisors, said domestic retail SIPs are bringing in around $3-3.5 billion every month. 

However, he cautioned that these flows cannot completely absorb abrupt bouts of foreign selling or the impact of global shocks. 

Crude Oil and Bond Yields Add to Pressure 

The September sell-off unfolded against a difficult global backdrop. Elevated crude oil prices, higher US bond yields and persistent foreign selling weighed on market sentiment during the month. 

Bhowar noted that the broader correction since late 2024 has reduced some of the speculative excess in the market and brought valuations lower. At the same time, he flagged further downside risk if crude oil moves above $100 a barrel. 

At levels around 22,700, the Nifty is trading at approximately 19.2 times trailing earnings. 

Choice Wealth sees a possible recovery window during November and December if earnings and festive demand improve, while identifying around 21,800 as a visible downside level under a more adverse scenario. 

September ultimately proved to be a difficult month for Indian equities. More than a tenth of the entire FII selling recorded in 2026 came during the month, with the heaviest withdrawals concentrated in its closing sessions. Domestic institutions continued to absorb much of that selling, but the Nifty still ended September sharply lower and remained nearly 13% down for the year.