Foreign Portfolio Investors (FPIs) have turned cautious again, pulling out ₹20,974 crore from Indian equities so far in September amid global uncertainties, higher U.S. interest rates and bond yields, elevated crude oil prices and a weakening rupee.

The latest outflow comes after foreign investors returned to Indian equities in July and August, when they invested ₹20,200 crore and ₹29,630 crore, respectively, according to data from CDSL.

With the September selling, FPIs have now withdrawn a total of ₹2.45 lakh crore from Indian equities so far in 2026, surpassing the ₹1.66 lakh crore outflow recorded during the entire 2025.

According to the data, FPIs withdrew ₹20,974 crore from Indian equities this month, till September 18. However, the trend of FPI investment through the primary market has been continuing in the month.

Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, attributed the latest selling by FPIs to three key factors — higher U.S. interest rates and yields, elevated crude oil prices amid geopolitical tensions, and weakness in the Indian rupee.

The Federal Reserve has raised rates to 3.75-4.00%, with the narrowing yield differential between India and the U.S. reducing the relative attractiveness of Indian assets. At the same time, Brent crude has remained above $100 a barrel, with escalating tensions in the West Asia adding to concerns over inflation and India’s import bill, he said.

The rupee has also come under pressure, declining 1.1% in the previous week, its sharpest weekly fall in four months. It traded at a record low of 95.92-95.96 per U.S. dollar and breached the 96-mark intraday, adding to concerns for foreign investors, he added.

“September’s FPI selling is a crude-and-dollar story, not an India story.

When oil spikes and U.S. yields firm up, money leaves every emerging market and India isn’t being singled out; it’s being caught in the tide,” Vedant Gupte, Co-Founder and CEO of Investment platform Trackk, said.

Going forward, FPI flows will be significantly influenced by the ongoing Iran-U.S. conflict and the consequent impact on crude prices. Elevated crude prices and the high U.S. bond yields (U.S. 10-year yield at 5%) are negatives for the Indian equity market and FPI flows, said V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

However, the resilient Indian economy and expectations of better earnings growth are positives, he added.

Foreign investors also extended their selling to the debt market during the period under review. They withdrew ₹10,296 crore through the Fully Accessible Route (FAR), ₹1,817 crore via the Voluntary Retention Route (VRR) and ₹1,068 crore through the general route.

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 U.S. 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 U.S. yields firm up and oil climbs, money leaves every emerging market,” he said.

Brent crude surged to $109.97 per barrel on Friday (September 11, 2026) 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 U.S. 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-U.S. conflict and its consequent impact on crude oil prices.

“Elevated crude prices (Brent is above $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 U.S. 10-year bond inches up to 5%, 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).

After a brief pause in October, Foreign Portfolio Investors (FPI) resumed selling, pulling out a net ₹3,765 crore from Indian equities in November, driven by global risk-off sentiment, volatility in global tech stocks, and selective preference for primary markets over secondary markets.

This dip in November came right after a net inflow of ₹14,610 crore in October, an uptick that had broken a three-month streak of withdrawals — ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July, according to data from the National Securities and Depositories Ltd. (NSDL).

The flow trend through November was shaped by a combination of global and domestic factors.

“On the global front, uncertainty around the U.S. Federal Reserve’s rate-cut trajectory, a firm U.S. dollar, and weak risk appetite across emerging markets kept foreign investors cautious. Persistent geopolitical tensions and volatile crude prices further reinforced the risk-off tone,” said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.

Domestically, this cautiousness was compounded by pockets of stretched valuations and subdued industrial indicators, which tempered investor conviction despite India’s relatively stable macroeconomic backdrop, he added.

Reflecting this sentiment, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that the outflows in November were primarily driven by global risk aversion and volatility in tech stocks. IT services, consumer services, and healthcare were among the sectors that faced the sharpest impact.

However, not all indicators point toward a sustained bearish trend. V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments, believes there is still no clear evidence of a trend reversal in FPI flows. He noted that FPIs were buyers on some days and sellers on others, an indication that flows may shift as conditions evolve.

“The recent rally, with both Nifty and Sensex hitting new records on November 27 after a fourteen-month wait, along with improved Q2 corporate earnings and expectations of further growth in Q3 and Q4, has lifted market sentiment,” Mr. Vijayakumar added.

Looking ahead, Angel One’s Mr. Khan said that FPI activity in December will likely depend on the U.S. Federal Reserve’s rate-cut signals and progress on the trade pact between India and the U.S.

So far in 2025, FPIs have withdrawn over ₹1.43 lakh crore from Indian equities. Meanwhile, in the debt market, FPIs invested ₹8,114 crore under the general limit while withdrawing ₹5,053 crore through the voluntary retention route during the same period.