Foreign investors withdraw ₹20,974 crore from Indian market in September:Sell ₹2.45 lakh crore worth of equities so far in 2026

The sell-off by foreign portfolio investors (FPIs) in the Indian stock market has returned. Foreign investors withdrew a substantial ₹20,974 crore from Indian equities up to 18 September. Global uncertainties, rising interest rates and bond yields in the US, high crude oil prices and the weakening rupee against the US dollar have made foreign investors cautious. After strong purchases worth ₹20,200 crore in July and ₹29,630 crore in August, selling has resumed in September. According to CDSL data, FPIs have withdrawn a total of ₹2.45 trillion, or ₹2.45 lakh crore, from Indian stocks so far in 2026. This figure is significantly higher than the total sell-off of ₹1.66 trillion recorded throughout 2025. However, one positive aspect amid this sell-off is that the trend of foreign investment through the primary market, or IPOs, has continued in September. 3 main reasons behind FPI selling According to Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, there are mainly three major reasons behind this selling by foreign investors… 1. High interest rates and bond yields in the US: The US Federal Reserve has raised interest rates to 3.75-4.00%. As a result, the yield gap between India and the US has narrowed, reducing the attractiveness of Indian assets to foreign investors. 2. Surge in crude oil prices: Brent crude has remained above $100 per barrel amid rising geopolitical tensions in West Asia. This has heightened concerns over rising inflation in India and an increase in the import bill. 3. Weakening rupee: The Indian rupee has fallen sharply against the US dollar. Recently, the rupee hit a low of 95.92-95.96 after recording its biggest weekly decline in four months (1.1%) and also crossed the 96 mark during intraday trading. This is adversely affecting foreign investors’ returns. Foreign Investors Sell in the Debt Market Too Besides equities, foreign investors have also withdrawn from the debt market. So far in September, foreign investors have withdrawn ₹10,296 crore through the Fully Accessible Route (FAR). They have sold ₹1,817 crore through the Voluntary Retention Route (VRR). In addition, they have withdrawn ₹1,068 crore through the General Route. What are FAR and VRR?