Market pain deepens, brokerages flag FII selling, crude, global yields as key risks

As per the latest business developments, Indian equities have posted their eighth straight weekly loss, the longest such streak in 25 years, as sustained FII selling, elevated US bond yields and elevated crude prices weighed on sentiment.

On October 1, the Sensex closed 571 points and the Nifty declined 0.88%, extending losses for a fourth straight session.

With the market under pressure, Bajaj Broking and Motilal Oswal have identified persistent foreign institutional investor (FII) outflows and a challenging global environment as the primary reasons for the lacklustre showing.

"Foreign Institutional Market participants (FIIs) continued to stay net sellers in the past week, offloading equities worth Rs 349.7 billion based on provisional exchange data," Bajaj Broking deputy vice president (research) Pabitro Mukherjee stated.

On the other hand, domestic institutional market participants (DIIs) offered firm backing, emerging as net buyers with investments totalling Rs 334.6 billion, he further noted.

The trend was additionally visible through September. "FIIs have pulled out a substantial Rs 440.1 billion from Indian equities during September 2026, while DIIs have infused Rs 760.3 billion during the same period," Mukherjee further stated.

Mukherjee stated elevated US bond yields, firm Brent crude prices and sustained FII outflows continued to weigh on sentiment, while uncertainty over a possible Iran peace deal and a depreciating indian rupee further noted to investor caution. He additionally flagged inflation and the domestic macro outlook as concerns amid elevated crude prices.

Motilal Oswal, in the meantime, noted that the Nifty declined 6.1% in September, its second consecutive monthly slide and the second-steepest monthly decline since October 2024. The index is down 13.4% in 2026 so far.

FIIs recorded $4.1 billion of outflows from Indian equities in September after two months of inflows, taking their CY26 outflows to $28.3 billion. DIIs, in contrast, invested $8 billion in September and $67.8 billion so far this year.

The brokerage additionally noted broad-based softness, with Technology, Financials Ex Banks, Automobiles, PSU Banks and Capital Goods among the sectors that declined in September.

With FII selling remaining a key headwind, Bajaj Broking stated Brent crude prices and developments around US-Iran geopolitical tensions will stay important drivers of market sentiment and foreign institutional flows.