Foreign investors again start withdrawing money from Indian markets:Rise in crude oil prices force FPIs to sell shares of companies

In the first week of September, foreign portfolio investors (FPIs) adopted a selling stance in the Indian stock market. During this period, foreign investors withdrew ₹7,443 crore from the Indian equity market. Rising crude oil prices, an increase in U.S. bond yields, and a strengthening dollar have reduced foreign investors’ appetite for risk. Before this, FPIs had made heavy purchases in Indian markets for two consecutive months-₹20,200 crore in July and ₹29,600 crore in August. Prior to the buying seen in July and August, foreign investors had remained net sellers for four consecutive months, from March through June. ₹2.32 lakh crore withdrawn so far in 2026 According to data from the National Securities Depository Limited (NSDL), following the latest selling in September, FPIs’ total outflows from Indian equities so far in 2026 have risen to ₹2.32 lakh crore. This figure is significantly higher than the total outflow of ₹1.66 lakh crore recorded in 2025. Key Reasons for the Sell-Off: Crude Oil, US Bonds, and Expensive Valuations According to NSDL data, foreign investors have withdrawn ₹7,443 crore from Indian equities as of September 4. Experts have explained the main reasons behind this sell-off as follows… Foreign investors’ confidence in IPOs remains intact Despite selling in the secondary market, foreign investors’ interest in the primary market remains strong. Rajkumar Rathi said that, as seen in early September, the pipeline of upcoming IPOs will continue to be a strong avenue 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. Money also withdrawn from the debt market Foreign investors sold in the debt, or bond, market along with equities. 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 the outlook be going forward? V K Vijayakumar, Chief Investment Strategist at Geojit Investments, believes that global bond yields will determine the primary direction of FPI flows in the coming period. What are FPI, FAR and VRR?