Foreign investors pull ₹7,443 crore from Indian equities in early September

Foreign portfolio investors turned net sellers in early September, marking a sharp reversal from the previous two months of sustained inflows into Indian equities. The withdrawal of ₹7,443 crore followed substantial investments of ₹30,919 crore in August and ₹20,200 crore in July, signalling renewed caution among overseas money managers.

Analysts attributed the selling pressure to a confluence of headwinds affecting emerging market sentiment. A rebound in crude oil prices has heightened concerns about India's inflation trajectory and current account deficit, while simultaneously strengthening US bond yields have made dollar-denominated fixed-income assets more attractive relative to equity investments in developing economies. The firmness of the US dollar index has further reduced the appeal of emerging market assets among foreign investors.

The latest outflow has pushed cumulative withdrawals by foreign portfolio investors to ₹2.32 lakh crore in 2026, already surpassing the ₹1.66 lakh crore withdrawn during the entire previous year. This represents a significant reversal from the pattern that had emerged between March and June, when foreign investors remained net sellers for four consecutive months before resuming purchases in July and August.

Market observers have pointed to weakening global risk sentiment as the primary driver of the renewed selling pressure. The combination of monetary policy uncertainties in developed markets, energy price volatility, and currency dynamics has rekindled hesitation among portfolio managers evaluating exposure to Indian equities and other emerging market securities.