Summary of this article
FPIs withdrew Rs 13,138 crore from Indian equities in September so far
Higher crude prices, US yields and a stronger dollar hurt sentiment
Iran-US tensions and crude prices could influence future FPI flows
Foreign Portfolio Investors (FPIs) withdrew Rs 13,138 crore from Indian equities in the first half of September, as rising crude oil prices, higher US bond yields and a firm dollar weighed on investor risk appetite.
According to data from the National Securities Depository (NSDL), FPIs pulled out Rs 13,138 crore from Indian equities during the first two weeks of September, through September 11.
The latest selling comes after FPIs turned net buyers in July and August, investing Rs 20,200 crore and Rs 29,631 crore, respectively. Before that, foreign investors had remained net sellers for four consecutive months from March to June.
With the September outflow, cumulative FPI selling in Indian equities has reached Rs 2.37 lakh crore so far in 2026. This is already higher than the Rs 1.66 lakh crore withdrawn during the whole of 2025, NSDL data showed.
Why Are FPIs Selling Indian Equities
The latest FPI selling is largely linked to global macroeconomic factors rather than a deterioration in the India story.
Crude oil prices have risen sharply amid escalating tensions in West Asia, with Brent crude futures trading above USD 108 a barrel and West Texas Intermediate (WTI) crude near USD 104 a barrel.
Higher oil prices raise inflation concerns, particularly for oil-importing economies such as India. A sustained rise in crude prices can also put pressure on the country's trade deficit and the rupee, making Indian assets relatively less attractive to foreign investors.
At the same time, rising US Treasury yields and a stronger dollar have reduced the appeal of emerging-market assets. Higher US yields increase the opportunity cost of investing in riskier markets, while a stronger dollar can add to currency risks for foreign investors.
Investor sentiment has also been affected by expectations around the US Federal Reserve's monetary policy. The possibility of a rate hike at the upcoming US Federal Open Market Committee (FOMC) meeting has added to concerns over global liquidity and emerging-market flows.
Iran-US Conflict Remains A Key Risk
FPI flows are likely to remain sensitive to developments in the Iran-US conflict and their impact on crude oil prices.
According to VK Vijayakumar, chief investment strategist at Geojit Investments, a sustained rise in oil prices could stoke inflation and limit the scope for monetary easing, pushing bond yields higher. If the US 10-year Treasury yield rises towards 5 per cent, global equity markets could see a sharp correction, prompting FPIs to sell equities and shift money to higher-yielding bonds, he said.
FPIs Also Sell Debt
Foreign investors also remained sellers in the Indian debt market during the period.
They withdrew Rs 1,350 crore through the Fully Accessible Route (FAR) and Rs 955 crore through the general route. However, they invested Rs 29 crore through the Voluntary Retention Route (VRR).
