FPIs sell ₹5,040 crore in a day as RBI prepares to drain surplus cash

Foreign portfolio investors sold Indian equities worth ₹5,040 crore on Friday, 28 August, the largest one-day disposal since 8 June. The sale cancelled most of the net FPI buying recorded in August and left the month's inbound book at about ₹454 crore. Domestic institutional investors bought ₹5,184 crore on the same day, almost a one-for-one offset on the cash market tape.

The rupee finished at 95.39 per dollar with the Reserve Bank selling dollars into the close. The 10-year government bond yield settled at 6.91 per cent. Nifty IT rose 3.5 per cent after Nvidia's latest results eased fears that AI infrastructure spending was rolling over. The Sensex had already closed at 77,264.51 earlier in the session's official print, up 331 points, with TCS among the leaders.

The two facts can sit together. Foreign money left the broader book. A single sector still caught a bid from investors who treat Nvidia's numbers as a global go-ahead for chip and services spending. That is why an IT index can rise on a day when FPIs are net sellers of India.

The cash the RBI wants out of the system

Net surplus liquidity was ₹3.75 trillion on Wednesday. The central bank's overnight variable rate reverse repo on Thursday drew ₹1.42 trillion of bids against a ₹2 trillion notification. A three-day VRRR to absorb ₹3 trillion was scheduled for Friday. VRRR is the tool the RBI uses when banks have more cash than the policy stance wants sloshing through the call market.

The weighted average call rate had printed at 5.21 per cent against a previous close of 5.18 per cent. The standing deposit facility, where banks park surplus without collateral, stands at 5.00 per cent. The repo rate is 5.25 per cent after the August MPC kept it unchanged and stayed neutral. Governor Sanjay Malhotra chaired that meeting. CPI for 2026-27 is projected at 5.0 per cent, with a 5.9 per cent print in the third quarter on the committee's own path.

When surplus cash is this large, the call rate leans toward the SDF. Pulling ₹3 trillion out for three days is an attempt to push the operating rate back toward the repo. It is not a rate hike. It is plumbing.

What Friday changes in the August scorecard

August had looked like a mild FPI rebuild until Friday. A ₹5,040 crore sale turns a month of slow buying into a rounding error. DIIs absorbing the other side is the pattern Indian cash markets have used for two years when foreigners leave. It keeps the index from a one-day gap. It does not replace the foreign bid in the next placement or in the rupee.

RBI dollar sales at 95.39 say the bank is still leaning against a faster slide. They also say the float is large enough that a single session of FPI outflow shows up in the pair. Readers who already saw the Sensex close need the flow number to explain the currency print. The index can rise on IT while the rupee still needs a seller of dollars at the close.

The next data to watch are the VRRR allotment for Friday's three-day auction and Monday's FPI ticket. If the auction takes most of the ₹3 trillion and the call rate lifts another few basis points, the plumbing worked. If FPIs sell again next week, Friday was the start of a book, not a one-day flush.