Foreign investors withdrew 13,138 crore rupees from the Indian stock market in the first half of September. This occurred against the backdrop of increasing global uncertainty, which led to rising crude oil prices, increased US bond yields, and a strengthening dollar, negatively impacting risk appetite.
This recent outflow followed a period when Foreign Portfolio Investors (FPIs) were net buyers in July and August, injecting 20,200 crore and 29,630 crore rupees, respectively. These figures were provided by the Central Depository Services (India) Ltd (CDSL).
Prior to this, FPIs had been net sellers for four consecutive months, from March to June. With the latest withdrawal, the total outflow from Indian equities by FPIs reached 2.37 trillion rupees in 2026, surpassing the 1.66 trillion rupees withdrawn throughout 2025, according to the data presented.
According to NSDL data, FPIs withdrew 13,138 crore rupees from Indian stocks in the first two weeks of September, up to September 11th.
Forecasts and Influencing Factors
Vedant Ghopte, co-founder and CEO of the investment platform Trackk, noted that the sales in September were driven more by global than domestic issues in India. He stated that 'the September sales are related to the dollar and oil, not India. When rates rise in the US and oil prices increase, money leaves all emerging markets.'
The price of Brent crude jumped to $109.97 per barrel on Friday and remained above the $102 per barrel mark, which is the July level, amidst heightened geopolitical tensions. The rise in interest rates and the high probability of a rate hike at the upcoming US Federal Reserve meeting next week also dampened investor sentiment, according to Pabitra Mukhyey, Vice President of Research at Bajaj Broking.
In the future, FPI flows are likely to be heavily dependent on the conflict between Iran and the US and its subsequent impact on crude oil prices. V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments, suggested: 'Higher crude oil prices (Brent above $108) and higher inflation imply a tightening of monetary policy, which means further increases in bond yields.' He added that 'if the 10-year US bond approaches 5 percent, there could be a sharp correction in global stock markets. In such a scenario, FPIs might become sellers and shift funds into high-yield bonds.'
Furthermore, foreign investors expanded their sales to the debt market during the period under review. They withdrew 1,350 crore rupees through the Fully Accessible Route (FAR) and 955 crore rupees through the general route, while investing 29 crore rupees through the Voluntary Repurchase Route (VRR).
