Foreign Portfolio Investors (FPIs) have withdrawn Rs 13,138 crore from Indian equities in the first two weeks of September, according to data from the Central Depository Services (India) Ltd (CDSL). This marks a reversal from the net buying trend observed in July and August, driven by global economic factors.
The latest outflow adds to the total withdrawal of Rs 2.37 lakh crore from Indian equities by FPIs in 2026, surpassing the Rs 1.66 lakh crore withdrawn during the entire 2025. The selling pressure is attributed to rising US bond yields and surging crude oil prices, which have led investors to pull back from emerging markets.
Brent crude prices have surged to USD 109.97 per barrel, maintaining levels above USD 102 per barrel amid geopolitical tensions. Additionally, the anticipation of a rate hike at the upcoming US Federal Open Market Committee (FOMC) meeting has further dampened investor sentiment.
“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.”
Vedant Gupte, Co-Founder and CEO of Trackk
Foreign investors have also reduced their exposure to the Indian debt market, withdrawing Rs 1,350 crore through the Fully Accessible Route (FAR) and Rs 955 crore through the general route, while making a minor investment of Rs 29 crore through the Voluntary Retention Route (VRR).
Vedant Gupte, Co-Founder and CEO of Trackk, noted that the selling was more influenced by global factors, stating, "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."
Background
The current trend of FPI outflows highlights the vulnerability of emerging markets to global economic shifts, particularly changes in US monetary policy and crude oil prices. Historically, such outflows have led to increased volatility in the Indian stock market.
Looking ahead, market participants will closely monitor developments in the Iran-US conflict and its impact on crude oil prices, as well as the trajectory of US bond yields. These factors are likely to significantly influence FPI flows and market dynamics in the coming months.
