Foreign portfolio investors have pulled out Rs 2.37 lakh crore from Indian equities so far this year, with the latest selling coming in the first half of September as global uncertainty, higher crude oil prices, rising US bond yields and a firm dollar hit investor risk appetite.FPIs withdrew Rs 13,138 crore from Indian equities in the first two weeks of September, up to September 11, according to NSDL data. The latest outflow has taken the year-to-date withdrawal well above the Rs 1.66 lakh crore that foreign investors pulled out during the whole of 2025.The September selling comes after a two-month period of buying. FPIs invested Rs 20,200 crore in Indian equities in July and another Rs 29,630 crore in August, according to data from Central Depository Services (India) Ltd (CDSL).That buying phase followed four consecutive months of selling between March and June.Vedant Gupte, Co-Founder and CEO of Trackk, said that the recent withdrawal was largely linked to developments outside India.“September selling is a dollar-and-crude story, not an India story. When US yields firm up and oil climbs, money leaves every emerging market,” he said.Crude oil prices have risen sharply amid heightened geopolitical uncertainty. Brent crude surged to $109.97 per barrel on Friday and continued to remain above $102 per barrel, its July-high level.Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking, said investor sentiment was also being affected by rising bond yields and a high probability of a rate hike at the US FOMC meeting in the coming week.The outlook for foreign investor flows is now closely linked to the Iran-US conflict and what happens to crude oil prices as a result.“Elevated crude prices (Brent is above $108) and higher inflation imply tighter monetary policy, which means bond yields will rise further,” V K Vijayakumar, chief investment strategist at Geojit Investments, said.“If the US 10-year bond inches up to 5 per cent, there can be a sharp correction in equity markets globally. In such a scenario, FPIs may turn sellers and move money to high-yielding bonds,” he added.The selling by foreign investors was not limited to equities. In the debt market, they withdrew Rs 1,350 crore through the Fully Accessible Route (FAR) and Rs 955 crore through the general route during the period under review.They invested Rs 29 crore through the Voluntary Retention Route (VRR).
