Foreign investors pulled out ₹13,138 crore from Indian equities in the first half of September, as heightened global uncertainty pushed crude oil prices higher, while rising US bond yields and a firm dollar weighed on risk appetite.
The latest outflow comes after Foreign Portfolio Investors (FPIs) turned net buyers in July and August, infusing ₹20,200 crore and ₹29,630 crore, respectively, according to data from the Central Depository Services (India) Ltd (CDSL).
Prior to that, FPIs remained net sellers for four consecutive months from March to June.
With the latest withdrawal, the total outflow from Indian equities by FPIs has climbed to ₹2.37 lakh crore so far in 2026, surpassing the ₹1.66 lakh crore withdrawn during the entire 2025, the data showed.
According to NSDL data, FPIs withdrew ₹13,138 crore from Indian equities in the first two weeks of September, till September 11.
Vedant Gupte, Co-Founder and CEO of investment platform Trackk, said the September selling was driven more by global factors than domestic concerns.
“September selling is a dollar-and-crude story, not an India story. When US yields firm up and oil climbs, money leaves every emerging market,” he said.
Brent crude surged to $109.97 per barrel on Friday and continued to remain above $102 per barrel, its July-high level, amid heightened geopolitical uncertainty.
Rising bond yields and a high probability of a rate hike at the US FOMC meeting in the coming week have also weighed on investor sentiment, said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.
Looking ahead, FPI flows are likely to be significantly influenced by the Iran-US conflict and its consequent impact on crude oil prices.
“Elevated crude prices (Brent is above USD 108) and higher inflation imply tighter monetary policy, which means bond yields will rise further,” V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said.
“If the US 10-year bond inches up to 5 per cent, there can be a sharp correction in equity markets globally. In such a scenario, FPIs may turn sellers and move money to high-yielding bonds,” he added.
Foreign investors also extended their selling to the debt market during the period under review. They withdrew ₹1,350 crore through the Fully Accessible Route (FAR) and ₹955 crore through the general route, while investing ₹29 crore through the Voluntary Retention Route (VRR).