fpis-continue-withdrawals-for-third-month-in-september

Foreign portfolio investors (FPIs) remained net sellers of Indian equities for the third consecutive month in September, withdrawing ₹23,885 crore (around USD 2.7 billion), data from depositories showed.

The month of August was marked by heavy outflows of ₹34,990 crore, while ₹17,700 crore was taken out in July. This took the year-to-date outflow to ₹1.58 lakh crore (USD 17.6 billion).

Investor sentiment has remained overtly cautious after the US imposed hiked tariffs of 50 per cent on Indian goods and US President Donald Trump signed a proclamation to increase one-time H-1B visa fee to USD 100,000. Export-oriented sectors like IT, are expected to receive a hit, say analysts.

Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said the rupee’s fall to a record low level also added currency risk, while relatively high valuations of Indian equities prompted rotation to other Asian markets.

Despite the ongoing sell-off, some analysts believe conditions may gradually turn in India’s favour.

 

Also Read: FPIs take out ₹7,945-cr from equities in September

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that valuations have now become more reasonable and that factors, such as a cut in GST rates and a pro-growth monetary policy, could help rekindle foreign interest.

“India remains the fastest-growing major economy globally,” Khan said, adding that the upcoming earnings season and macroeconomic data will play a key role in determining FPI flows in the near term.

Echoing this, Srivastava pointed out that a sustained FPI turnaround will hinge on tariff clarity, currency stabilisation, earnings visibility, and a supportive global rate environment. If these factors improve, India’s strong structural growth story could draw foreign investors back selectively.

Meanwhile, debt markets witnessed net inflow, with FPIs investing about ₹1,085 crore under the general limit and ₹1,213 crore through the voluntary retention route in September.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, observed that FPIs’ strategy of shifting funds from India to other markets has so far yielded better returns, as Indian equities have underperformed most global markets over the past year, with one-year returns in negative territory.