Mumbai36 minutes ago
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In the first week of September, foreign portfolio investors i.e. FPIs have adopted a selling stance in the Indian stock market. Foreign investors have withdrawn ₹7,443 crore from the Indian equity market during this period.
Due to the rise in crude oil prices, increase in US bond yields and strengthening dollar, the risk appetite of foreign investors has reduced.
Earlier, FPIs had made huge purchases in the Indian markets for two consecutive months – ₹20,200 crore in July and ₹29,600 crore in August.
Before the buying in July and August, foreign investors had been net sellers for four consecutive months from March to June.
Withdrawal of ₹2.32 lakh crore so far in 2026
According to the data of National Securities Depository Limited i.e. NSDL, after this latest selloff in September, the total withdrawal of FPIs from Indian stocks so far in the year 2026 has increased to ₹ 2.32 lakh crore. This figure is much more than the total withdrawal of ₹ 1.66 lakh crore in the year 2025.
Main reasons for selling: Crude oil, US bonds and expensive valuations
According to NSDL data, foreign investors have pulled out ₹7,443 crore from Indian stocks till September 4. Experts have explained the main reasons behind this sell-off like this…
- Concern about crude oil and inflation: According to Rajkumar Rathi, Chief Investment Officer, Yes Securities, the recent rise in crude oil prices has increased concerns about India’s inflation rate and current account outlook.
- US Bond Yield and Dollar Index: The strengthening of bond yields and the dollar index in the US has reduced the risk appetite of foreign investors for emerging markets.
- Profit Booking: The premium valuations of the Indian stock market, especially in the growth sectors and mid- and small-cap segments, have led foreign funds to book profits and rebalance their portfolios.
Confidence of foreign capital remains intact in IPO
Despite the selling in the secondary market, the inclination of foreign investors towards the primary market is strong.
Rajkumar Rathi said that as seen in early September, the pipeline of upcoming IPOs will continue to be a strong instrument for foreign capital.
If companies keep the prices of their primary offerings attractive, FPI inflows into the primary market will continue despite selling in the secondary market.
Withdraw money from debt market also
Along with equity, foreign investors also sold the debt and bond markets. FPIs withdrew ₹377 crore through the Fully Accessible Route (FAR) and ₹231 crore through the Voluntary Retention Route (VRR). However, they invested ₹217 crore through the general route.
What will be the trend going forward?
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, believes that global bond yields will determine the main direction of FPI flows in the coming times.
What are FPI, FAR and VRR?
- Foreign Portfolio Investors (FPI): Foreign investors or institutions that invest in a country’s stocks, bonds, or financial assets. They do not take part in the management of the company, but invest money for market returns.
- Fully Accessible Route (FAR): An instrument launched by the Reserve Bank of India, under which foreign investors are allowed to invest in government securities without any investment limit.
- Voluntary Retention Route (VRR): It provides an easy way for foreign investors to invest in the Indian debt market, provided they commit to keep their capital in India for a certain period (minimum 3 years).
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