Foreign Portfolio Investors (FPIs) have turned cautious again, pulling out ₹20,974 crore from Indian equities so far in September amid global uncertainties, higher U.S. interest rates and bond yields, elevated crude oil prices and a weakening rupee.

The latest outflow comes after foreign investors returned to Indian equities in July and August, when they invested ₹20,200 crore and ₹29,630 crore, respectively, according to data from CDSL.

With the September selling, FPIs have now withdrawn a total of ₹2.45 lakh crore from Indian equities so far in 2026, surpassing the ₹1.66 lakh crore outflow recorded during the entire 2025.

According to the data, FPIs withdrew ₹20,974 crore from Indian equities this month, till September 18. However, the trend of FPI investment through the primary market has been continuing in the month.

Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, attributed the latest selling by FPIs to three key factors — higher U.S. interest rates and yields, elevated crude oil prices amid geopolitical tensions, and weakness in the Indian rupee.

The Federal Reserve has raised rates to 3.75-4.00%, with the narrowing yield differential between India and the U.S. reducing the relative attractiveness of Indian assets. At the same time, Brent crude has remained above $100 a barrel, with escalating tensions in the West Asia adding to concerns over inflation and India’s import bill, he said.

The rupee has also come under pressure, declining 1.1% in the previous week, its sharpest weekly fall in four months. It traded at a record low of 95.92-95.96 per U.S. dollar and breached the 96-mark intraday, adding to concerns for foreign investors, he added.

“September’s FPI selling is a crude-and-dollar story, not an India story.

When oil spikes and U.S. yields firm up, money leaves every emerging market and India isn’t being singled out; it’s being caught in the tide,” Vedant Gupte, Co-Founder and CEO of Investment platform Trackk, said.

Going forward, FPI flows will be significantly influenced by the ongoing Iran-U.S. conflict and the consequent impact on crude prices. Elevated crude prices and the high U.S. bond yields (U.S. 10-year yield at 5%) are negatives for the Indian equity market and FPI flows, said V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

However, the resilient Indian economy and expectations of better earnings growth are positives, he added.

Foreign investors also extended their selling to the debt market during the period under review. They withdrew ₹10,296 crore through the Fully Accessible Route (FAR), ₹1,817 crore via the Voluntary Retention Route (VRR) and ₹1,068 crore through the general route.