Why Are Indian Investors Buying When Foreigners Are Selling? What Nilesh Shah Says About FPI Selling and DII Buying in 2026
- October 26, 2026
- Posted by: Lakshit Sharma
- Category: News
Indian investors buying while foreigners sell is the defining flow story of 2026. FPIs sold a record Rs 3.08 lakh crore of Indian equities in the first nine months of the year, according to NSDL data cited in earlier reports, while domestic institutions bought a net Rs 6.83 lakh crore. Market veteran Nilesh Shah has called the foreign selling a strategic reallocation and not a permanent exit.
Quick Answer
Indian investors buying through domestic institutions and systematic plans has more than absorbed foreign selling in 2026, with DIIs buying about 2.2 times the net FPI selling in the first nine months (my calculation). Nilesh Shah’s earlier comments, reported on 16 Oct, describe FPI selling as a reallocation driven by high US rates and the pull of AI-linked markets, and he points to a double tax on foreign investors from securities transaction tax and long-term capital gains tax. Large and midcap valuations are about 30% below their September 2024 peaks, which supports domestic buying. I could not retrieve his comments of 26 Oct, so this article uses his earlier remarks and the verified flow data.
Indian investors buying has kept the Nifty from falling further, even though it is down about 13.56% for the year. Without domestic flows, a record foreign exit would have hurt prices far more.
This article explains why Indian investors buying and foreigners selling coexist, what the flow numbers show, what Nilesh Shah has said and what it means for investors. It is educational and not a recommendation to buy or sell.
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Indian Investors Buying vs FPI Selling: The Numbers
| Indian investors buying: flow measure | FPIs (foreign) | DIIs (domestic) |
|---|---|---|
| First nine months of 2026 (net) | Sold Rs 3.08 lakh crore | Bought Rs 6.83 lakh crore |
| All of 2025 (net) | Sold Rs 1.66 lakh crore | Bought Rs 7.88 lakh crore |
| First 12 sessions of October 2026 | Sold Rs 45,934 crore | Bought Rs 47,895 crore |
| 8 Oct 2026 (single day) | Sold Rs 12,943.58 crore | Bought Rs 10,703.11 crore |
| 21 Oct 2026 (single day) | Bought Rs 1,022 crore | Bought Rs 1,614 crore |
The flows behind Indian investors buying come from NSDL, exchange data and tracker reports. Different sources give different totals, for example a 5paisa headline puts 2026 FII outflows at Rs 4.45 lakh crore, a larger number than the NSDL figure, because the period and the definition of flows differ. The direction is the same in every source, which is foreign selling and domestic buying.
In October so far, DIIs bought about Rs 1,961 crore more than FIIs sold (my calculation from the tracker totals). That is a thin margin compared with the early-October days when foreign selling peaked, which is why the market has been fragile.
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What Nilesh Shah Says About FPI Selling
| Indian investors buying: Nilesh Shah’s point (reported 16 Oct) | What it means |
|---|---|
| Foreign selling is a strategic reallocation | Money is moving to US assets and AI themes because of high US rates, and is not a verdict on India |
| STT plus long-term capital gains tax is a double tax | Foreign investors face a higher effective tax in India, which weighs on returns |
| Valuations are about 30% below September 2024 peaks | Large and midcaps look lower-priced, which attracts domestic buyers |
| He likes consumption and banking | Sectors tied to domestic demand are his preferred areas |
These remarks on Indian investors buying are from a secondary report dated 16 Oct and not from a fresh interview, so please treat them as his earlier view. If the 26 Oct interview repeats them, it supports the idea that Indian investors buying is a deliberate response to lower valuations. The reallocation argument also implies that foreign money could return if US rates fall or if the AI trade cools, but no one can say when.
Why Indian Investors Buying Continues
- Lower valuations support Indian investors buying. Large and midcap valuations are about 30% below their September 2024 peaks, according to the reported comments.
- Steady domestic flows behind Indian investors buying. DIIs bought a net Rs 6.83 lakh crore in 2026 so far and Rs 7.88 lakh crore in 2025, which suggests a consistent base of savings flowing into equities.
- Fewer alternatives. Gold fell about 4% last week, so some savers who moved to gold have seen a drawdown.
- Long horizons. Retail and institutional investors saving for retirement or goals can look through an oil shock.
- A sell-off in foreign hands. Domestic buyers absorb stock that foreigners sell, which supports prices at lower levels.
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Daily Flow Check: How Indian Investors Buying Offsets Foreign Selling
| Indian investors buying: date | FII net (Rs crore) | DII net (Rs crore) | Combined (my calculation) |
|---|---|---|---|
| 8 Oct 2026 | Minus 12,943.58 | Plus 10,703.11 | Minus 2,240.47 |
| 9 Oct 2026 | Minus 3,568.90 | Plus 4,743.26 | Plus 1,174.36 |
| 12 Oct 2026 | Minus 1,708.48 | Plus 3,045.02 | Plus 1,336.54 |
| 13 Oct 2026 | Minus 1,305.13 | Plus 2,439.24 | Plus 1,134.11 |
The daily table shows how Indian investors buying works in practice. On three of the four days, DII buying exceeded FII selling and the combined flow was positive. On 8 Oct, foreign selling of Rs 12,943.58 crore was larger than DII buying, and the combined flow was negative. This pattern shows that DII buying can absorb steady foreign selling, but a one-day spike can overwhelm it.
What FPI Selling and DII Buying Mean for Prices and Indian Investors Buying
FPI selling and DII buying largely offset each other in the cash market. When DII buying is larger, as in the first 12 sessions of October, prices tend to hold up better than the size of foreign selling would suggest. The Nifty still fell about 2.36% last week, and the Midcap index fell 5.6%, so Indian investors buying has softened the decline and has not prevented it.
Domestic institutions include mutual funds, insurers and pension funds. Monthly systematic investment plans give mutual funds a steady inflow that they invest regardless of daily index moves, which is one reason Indian investors buying has persisted through a falling market. I do not have the latest monthly SIP figure, so I have not quoted one.
Sector choice matters as well. Nilesh Shah prefers consumption and banking, and the Bank Nifty closed Friday at 54,287.35 after falling 2.79% on the week, so even preferred sectors have not been immune. Long-term investors can use such falls to review whether Indian investors buying at current levels fits their goals and time horizon.
A final point about DII buying is that it is not unlimited. Domestic funds hold cash from new inflows, and if investors redeem during a long fall, fund managers have less to buy. Watching the pace of DII buying alongside FPI selling gives a better read of market strength than watching either alone.
Risks When Indian Investors Buying Meets FPI Selling
| Indian investors buying: risk | Why it matters |
|---|---|
| Midcaps and smallcaps | Midcap index fell 5.6% to a six-month low and smallcaps fell 7.3% last week, the worst in 20 months |
| Oil and war | Brent near $115 with the Iran war in its ninth month raises inflation and rupee risk |
| Fed and rates | The Fed meets on 27 and 28 Oct and a December hike is expected in a Reuters poll |
| Wealth erosion | About Rs 21 lakh crore of investor wealth was lost last week |
| Concentrated flows | Domestic buying depends on continued inflows, which can slow if returns stay negative |
Indian investors buying met a steadier tape on 26 Oct, when the Nifty traded near 22,654 to 22,687 after closing at 22,600 on Friday, and the India VIX stood near 17.56. FPIs bought about Rs 890 crore on Friday and were net buyers in three of the last five sessions, which suggests that selling may be easing, although one week does not make a trend.
For investors, the point is that Indian investors buying does not ensure higher prices. It supports the market when foreigners sell, but a long fall in prices can wear down domestic confidence as well.
Conclusion
Indian investors buying and foreigners selling coexist because of high US rates, the pull of AI-linked markets, a double tax on foreign returns and valuations that are about 30% below peak. Nilesh Shah describes the selling as a strategic reallocation, and the flows support that view for now. Check current flow data, diversify and invest according to your own risk profile.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions
Why are Indian investors buying when foreigners are selling?
Ans. Foreign investors are reallocating money because of high US interest rates and attractive AI-linked markets, while domestic institutions and retail savers see lower valuations in India. DIIs bought a net Rs 6.83 lakh crore in 2026 against net FPI selling of Rs 3.08 lakh crore in the first nine months.
What did Nilesh Shah say about FPI selling?
Ans. In remarks reported on 16 Oct, Nilesh Shah called FPI selling a strategic reallocation and not a permanent exit, pointed to a double tax from STT and long-term capital gains tax, and noted valuations about 30% below September 2024 peaks. I could not retrieve his comments of 26 Oct.
How much have FPIs sold in 2026?
Ans. NSDL data cited in reports show net FPI selling of Rs 3.08 lakh crore in the first nine months of 2026, against Rs 1.66 lakh crore for all of 2025. A 5paisa headline puts 2026 FII outflows at Rs 4.45 lakh crore, and different trackers use different periods.
How much have DIIs bought in 2026?
Ans. Indian investors buying through DIIs came to a net Rs 6.83 lakh crore in 2026 so far, compared with Rs 7.88 lakh crore in all of 2025. In the first 12 sessions of October, DIIs bought Rs 47,895 crore while FIIs sold Rs 45,934 crore.
Is FPI selling easing?
Ans. There are early signs. FPIs bought about Rs 890 crore on Friday and were net buyers in three of the last five sessions. One week is not a trend, and the Fed meeting on 27 and 28 Oct could change the direction.
What is the double tax that foreign investors face?
Ans. Nilesh Shah has described securities transaction tax plus long-term capital gains tax as a double tax for foreign institutional investors. The combined effect lowers their net returns in India compared with some other markets.
Is this article on Indian investors buying investment advice?
Ans. No. This article on Indian investors buying is educational. Flow figures come from NSDL, exchanges, trackers and news reports and may differ between sources. Please check the facts and your own risk profile before you invest.
Is this article investment advice?
Ans. No. It is educational and not a recommendation to buy or sell. Please check the figures against company filings and your own risk profile before you act on anything you read here.