FPIs pull ₹21,000 crore from Indian equities in September amid global headwinds

Foreign Portfolio Investors (FPIs) have reversed course in September, withdrawing ₹20,974 crore from Indian equities as mounting global uncertainties weighed on investor sentiment. The outflow marks a sharp turnaround from the previous two months, when foreign investors had pumped in ₹20,200 crore in July and ₹29,630 crore in August, signalling renewed caution in emerging markets.

The September selling has been driven by several converging headwinds, including higher US interest rates and bond yields that make dollar-denominated assets more attractive, elevated crude oil prices straining emerging market currencies, and depreciation pressure on the Indian rupee. These factors have collectively prompted foreign investors to reassess their exposure to Indian equities.

The September outflows have widened FPI net withdrawals significantly. Through September 18, foreign investors have pulled a cumulative ₹2.45 lakh crore from Indian equities in 2026 alone—surpassing the total ₹1.66 lakh crore outflow recorded during the entire 2025, according to data from the Central Depository Services Limited (CDSL).

Despite the equity market selling, FPI investment activity through India's primary market has remained resilient, suggesting foreign investors continue to find selective opportunities in new issuances even as they trim existing positions. Analysts attribute the latest withdrawal to three principal factors centred on higher US interest rates and their ripple effects across global financial markets.