FPIs Withdraw ₹35,860 Crore From Indian Equities In September
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Foreign portfolio investors withdrew ₹35,860 crore from Indian equities in September despite SEBI’s easier access reforms, as global yields, oil prices, rupee weakness and market valuations weighed on sentiment.
Foreign portfolio investors (FPIs) resumed selling Indian equities in September after recording inflows in the previous two months. They withdrew ₹35,860 crore from Indian stocks during the month, according to depository data.
The outflow marked a sharp reversal from July and August. FPIs had invested ₹20,200 crore in July and ₹29,630 crore in August.
The renewed selling came as Indian equities faced a sharp correction. Both the Nifty 50 and Sensex fell by nearly 6% during September.
SEBI Moves To Make FPI Access Easier
The Securities and Exchange Board of India (SEBI) has been working with the Reserve Bank of India (RBI) to reduce the regulatory hurdles faced by foreign investors.
SEBI Chairman Tuhin Kanta Pandey said on 3 October 2026 that the regulator had already simplified FPI onboarding and market access. He added that SEBI was working with the RBI on further measures.
The reforms include faster digital registration and simpler KYC procedures. They are also aimed at reducing documentation requirements and operational costs for foreign investors.
The regulator has introduced the SWAGAT-FI framework for trusted foreign investors. The regulator has also eased certain requirements for FPIs that invest exclusively in government securities.
US Yields, Oil Prices And Rupee Weakness Weigh On Flows
Global financial conditions have added to the pressure on Indian equities. Elevated crude oil prices are another concern for India because the country is heavily dependent on imports. A weaker rupee can also reduce the dollar-denominated returns earned by foreign investors.
The US 10-year Treasury yield rising above 5.2% has further influenced foreign investment decisions. Geopolitical tensions and expectations of persistently high oil prices have also affected sentiment.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said sustained FPI selling had weakened the Indian market. He also pointed to deficient monsoon rainfall as another factor affecting investor sentiment.
Despite the selling, India's challenge is not necessarily limited to investor confidence in its domestic growth story. Foreign investors are also reallocating capital based on global yields, currency movements and opportunities in competing markets.
SEBI and the RBI can make India's markets easier and cheaper to access. However, foreign capital will ultimately depend on whether Indian assets offer sufficiently attractive risk-adjusted returns compared with other global investment opportunities.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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