Foreign portfolio investors turn net sellers of Indian equities in early September

Foreign portfolio investors (FPIs) turned net sellers of Indian equities in the first week of September, withdrawing Rs 7,443 crore after investing in the market for two consecutive months. The latest selling came as a rebound in crude oil prices, rising US bond yields and a firm dollar weighed on risk appetite. FPIs had infused Rs 30,919 crore into Indian equities in August and Rs 20,200 crore in July. Before the two-month buying streak, foreign investors had remained net sellers for four consecutive months from March to June. With the latest withdrawal, the total amount pulled out by FPIs from Indian equities in 2026 has risen to Rs 2.32 lakh crore. This is higher than the Rs 1.66 lakh crore withdrawn during the whole of 2025.

Crude rebound, yields and dollar weigh on sentiment Rajkumar Rathi, chief investment officer at YES Securities, said the recent selling was driven by a rebound in crude oil prices, which 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. Despite the selling in the secondary market, he said foreign investor appetite for India's primary market has remained "structurally resilient".

Global cues to guide FPI flows Looking ahead, global bond yields are likely to remain a key driver of FPI flows, VK 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 continued to sell in the debt market during the period. They withdrew Rs 377 crore through the Fully Accessible Route (FAR) and Rs 231 crore through the Voluntary Retention Route (VRR). At the same time, they invested Rs 217 crore through the general route.