Foreign inflows and bond yield shift boost Indian currency

Foreign Institutional Investors (FIIs) sold a total of ₹54,636 crore in Indian equities up to Oct 16, outpacing September’s volumes. However, the pace of sales slowed in the days that followed, and on Oct 16 the FIIs recorded a modest net purchase.

A key catalyst for this temporary shift was the decline in the U.S. 10‑year Treasury yield, which fell from above 5.3% to around 5.08%. The lower yield, combined with the rupee strengthening below the 95‑per‑dollar mark, encouraged foreign investors to re‑enter the market.

Analysts describe the change as tactical rather than structural, noting that FIIs continue to offload shares in the financial and oil sectors while showing buying interest in digital platforms, entertainment, restaurants, and healthcare.

Last week’s sharp 2.77% rise in the Nifty index forced FIIs to cover some short positions, adding support to banking stocks that had faced heavy foreign‑investor selling.