- FPIs withdrew Rs 35,860 crore from Indian equities in September.
- Total FPI outflow this year reached Rs 2.7 lakh crore.
- Reasons include high crude, US bond yields, and a weak rupee.
Foreign Portfolio Investors (FPIs) turned net sellers in September, pulling out Rs 35,860 crore from Indian equities, taking the total figure to Rs 2.7 lakh crore this year so far. As per analysts, FPI outflows were one of the key drivers of volatility in indian equities on the back of global uncertainties, elevated crude prices and higher US bond yields.
The selling continued into October as well, with foreign investors pulling out another Rs 9,232 crore in a single session from equities on Thursday, October 1, as per data from Central Depository Services Limited (CDSL).
The FPIs' exodus resumed last month after they infused Rs 20,200 crore and Rs 29,630 crore in Indian equities in July and August, respectively.
FPI Withdrawals Rs 2.7 Lakh Crore This Year
With the latest selling, FPIs have now withdrawn around Rs 2.7 lakh crore from Indian equities so far in 2026, significantly higher than the Rs 1.66 lakh crore outflow recorded during the entire year 2025.
Why FPIs Exodus Continues In Indian Market
Rajesh Singla, Fund Manager & CEO at Alpha AMC, said FPIs were withdrawing from Indian equities largely due to external factors that include:
1- Elevated crude prices due to constraints from Hormuz-related supply risks
2- A weak rupee
3- Higher US bond yields
4- Profit-booking sentiment among investors after July-August inflows
5- Rotation towards AI-led North Asian markets.
"This is a global allocation story, not a domestic earnings one," he said.
Singla said domestic SIP flows were helping absorb the impact of foreign selling, while SME and small-cap segments, which have relatively limited FPI ownership, remained comparatively insulated.
"Strategically, India's growth case is intact; capital is rotating, not exiting," he added.
FPI Outlook: Indian Stock Market
As per the analyst, the ongoing Iran-US conflict and its impact on crude oil prices could decide the mode of FPI going forward. Higher crude oil prices and rising US bond yields, especially US 10-year bond yields of around 5 per cent, could impact Indian equity and FPI flows.
However, the prospect of a strong Indian economy and strong earnings growth remained positive factors.
The selling momentum by foreign investors also extended to the debt market during the month under review is well as they withdrew Rs 10,431 crore through the Fully Accessible Route (FAR) and Rs 5,049 crore via the Voluntary Retention Route (VRR). Additionally, foreign investors pulled out Rs 5,246 crore through the general route from the domestic bond market.
Conclusion
The key domestic equity indices–Nifty and Sensex–remained under pressure during September, hitting multiple-month low levels. The sell-off was seen in the broader market as well. BSE Sensex and NSE’s Nifty50 nosedived over 6 per cent during the month. A massive rush in the IPO market is also draining liquidity from the secondary market. Meanwhile, US-Iran tensions are not showing signs of cooling down, driving up inflation in emerging markets.