Foreign investor sentiment has deteriorated again, leading to the withdrawal of 744.3 billion rupees from the Indian market in the first week of September alone. The main reason for instability in the stock markets is the tension between the US and Iran in the Middle East, which directly affects investments by foreign participants.
After a period of stable investment lasting about two months, FPI (Foreign Portfolio Investors) sentiment worsened again, and they began actively selling assets. This decline in September occurred after a strong sell-off had been observed over four months previously.
According to a PTI report, in the first half of September, foreign investors withdrew a significant amount of 744.3 billion rupees from the Indian stock market. Previously, over two months, FPIs had shown active position building: they invested 202.0 billion rupees in July and 309.19 billion rupees in August.
Despite significant inflows over the last two months, the subsequent sell-off in early September led to an increase in the total volume of funds withdrawn by foreign investors from the Indian market in 2026. Currently, the total amount withdrawn has reached approximately 2.32 lakh crore rupees, significantly exceeding the figure from the previous fiscal year when FPIs withdrew 1.66 lakh crore rupees.
One of the key factors contributing to the renewed capital outflow is the sharp rise in crude oil prices on the international market. This rise is directly linked to reports of increased tension between the US and Iran. Experts note that the increase in crude oil prices has once again heightened FPI concerns, as it increases the risk of inflation in the country.
The report notes that the future stance of FPI may depend on changes in bond yields. Vike Vijayakumara, Chief Investment Strategist at Geojit Investments, stated that FPI attention will be focused on changes in bond yields in the coming days.