New Delhi: After investing in Indian equities for two consecutive months, foreign investors turned net sellers in the first week of September, pulling out Rs 7,443 crore as a rebound in crude oil prices, rising US bond yields, and a firm dollar dented risk appetite.
The outflow came after Foreign Portfolio Investors (FPIs) infused over Rs 29,600 crore in August and Rs 20,200 crore in July, data from National Securities Depository Limited (NSDL) showed.
Before that, they had remained net sellers for four straight months from March to June.
With the latest withdrawal, the total outflow by foreign portfolio investors from Indian equities climbed to Rs 2.32 lakh crore so far in 2026, surpassing the Rs 1.66 lakh crore withdrawn during the entire year 2025, the data showed.
According to NSDL data, FPIs withdrew Rs 7,443 crore from Indian equities in the first week of the month, till September 4.
Rajkumar Rathi, Chief Investment Officer at YES Securities, said the recent selling was driven by a rebound in crude oil prices, which has raised concerns over India’s inflation and current account outlook.
“Further strengthening US bond yields and a firm dollar index have reduced foreign risk appetite for emerging markets,” he said.
Rathi also pointed to India’s premium equity valuations, particularly in growth sectors and the mid- and small-cap segments, as factors prompting foreign funds to book profits and rebalance portfolios.
However, he said foreign investor appetite for India’s primary market has remained “structurally resilient”.
“As seen in early September, the pipeline of upcoming IPOs will continue to act as a distinct sponge for foreign capital. If companies price their primary offerings attractively, it will structurally sustain primary market FPI inflows, even if the secondary market faces net selling,” Rathi said.
Looking ahead, global bond yields are likely to remain a key driver of FPI flows, V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said.
Brent crude prices, evolving US-Iran geopolitical tensions and upcoming US inflation data ahead of the Federal Reserve’s mid-September policy meeting will also influence foreign fund flows, said Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking.
Foreign investors also extended their selling to the debt market during the period under review. They withdrew Rs 377 crore through the Fully Accessible Route (FAR) and Rs 231 crore through the Voluntary Retention Route (VRR) while investing Rs 217 crore through the general route.
