FPIs sell ₹7,443 crore of Indian equities in first week of September

Foreign portfolio investors turned sellers in the Indian stock market kicking off September with a rout as they pulled out ₹7,443 crore from the domestic bourses in the first week through September 4, according to the National Securities Depository Limited (NSDL) data. 

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After two months in a row of purchases, the selling represents a change. In August and July, FPIs invested around ₹29,600 crore and ₹20,200 crore, respectively, in Indian stocks. Prior to that, from March to June, they were net sellers for four consecutive months.  

With this most recent withdrawal, foreign portfolio investors have removed ₹2.32 lakh crore from Indian stocks in 2026. That is already more than the ₹1.66 lakh crore they took out throughout the course of 2025. 

Higher crude oil prices, rising U.S. bond rates, and a stronger dollar have all contributed to the current selling.  

The increase in crude prices has sparked worries about India's inflation and current account prospects, according to Rajkumar Rathi, Chief Investment Officer of YES Securities. Additionally, he cited a firm dollar index and increased U.S. bond yields as reasons why international investors were less interested in emerging countries. 

Valuations in the Indian market are another consideration. Rathi said premium valuations, particularly in growth stocks as well as the mid- and small-cap segments, could lead foreign funds to book profits and rebalance their portfolios. 

There has, however, been a difference between foreign flows into the secondary market and the primary market. 

Rathi said foreign investor interest in India's primary market had remained resilient. He expects the pipeline of upcoming initial public offerings to continue drawing foreign capital, provided companies price their offerings attractively. In his view, this could keep primary market FPI inflows going even while foreign investors are selling in the secondary market. 

What could influence FPI flows 

Global bond yields are likely to remain an important factor for foreign flows into Indian markets, according to V K Vijayakumar, Chief Investment Strategist at Geojit Investments. 

Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, said Brent crude prices, developments in US-Iran geopolitical tensions and the upcoming U.S. inflation data would also be important. 

The U.S. inflation numbers are due ahead of the Federal Reserve's policy meeting in mid-September. 

Foreign investors were sellers in the debt market as well during the period. 

They withdrew ₹377 crore through the Fully Accessible Route (FAR) and another ₹231 crore through the Voluntary Retention Route (VRR). At the same time, they invested ₹217 crore through the general route. 

For the equity market, the immediate picture is therefore one of renewed foreign selling after the buying seen in July and August. The ₹7,443 crore withdrawal in the first week of September also means that foreign investors' net outflow from Indian equities this year has now moved well above last year's full-year figure.