Provisional exchange data showed heavy FPI selling last week, but settled depository figures reveal a net inflow once IPO investments are counted in.
Foreign portfolio investors intensified selling of Indian equities in the week of September 21 to 25, 2026, with provisional National Stock Exchange data showing net outflows of ₹11,490 crore, according to a report published by The Economic Times on September 26. Yet settled depository data from NSDL and CDSL for the same week showed a net equity inflow of ₹3,843 crore, a discrepancy the report attributed largely to ₹5,515 crore that foreign investors poured into primary-market transactions on September 24 alone. The contrast, rather than pointing to a wholesale retreat from Indian markets, points to a more selective foreign investment strategy playing out beneath the headline numbers.
Why NSE Can't Trade Its Own Shares Yet:Chairman Says SEBI Holds the Key
Two Data Sets, One Confusing Week
The apparent contradiction between exchange-based and depository-based figures sits at the center of the story. Exchange data capture only secondary-market buying and selling of already listed shares, while NSDL and CDSL depository figures also reflect settled primary-market allotments, including IPO subscriptions and related flows. A week of heavy secondary-market selling can therefore coexist with a net depository inflow once fresh listings are included, because the two data sets are measuring different segments and stages of market activity rather than offering competing versions of the same transaction.
This distinction matters because headline outflow figures dominate market commentary and can create an impression of indiscriminate foreign exit. Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, told The Economic Times that the pattern reflects a preference for “selective primary-market opportunities over broad-based secondary-market exposure,” describing the behavior as “less like a wholesale withdrawal from India and more like portfolio selectivity.” Foreign investors, in his assessment, are trimming exposure to existing listed equities while continuing to allocate fresh capital toward IPOs where valuations, scarcity value or liquidity profiles may appear more attractive than the broader listed market.
A Month of Reversal After Two Months of Buying
The September episode follows a marked reversal in FPI behavior. After investing in Indian equities through July and August, foreign investors turned net sellers in the first week of September, pulling out ₹7,443 crore as crude oil prices rebounded, U.S. bond yields rose and the dollar firmed, according to The Hindu. Selling accelerated through the first half of the month, with NSDL-based reporting showing ₹13,138 crore withdrawn through September 11 and Outlook Money citing similar figures for the period.
By September 18, reported September withdrawals had climbed to ₹20,974 crore in one data set cited by The Hindu and the Tribune, while a separate Economic Times report placed exchange-based selling through September 19 above ₹23,000 crore, and Fortune India cited NSDL figures showing ₹23,676 crore sold through exchanges between September 1 and 19. The gap between these figures largely reflects differing cut-off dates and whether calculations include exchange transactions alone or broader depository-settled activity, underscoring how sensitive the “headline” FPI number can be to methodology.
Fed Raises Rates First Time in Three Years, Treasury Yields Surge
The Larger 2026 Outflow and Its Debt-Market Complication
The cumulative scale of 2026 selling adds weight to the story even if the latest week does not support an interpretation of panic-driven flight. One report citing market data said FPIs had withdrawn approximately ₹2.45 trillion from Indian equities during 2026 through September, already surpassing the ₹1.66 trillion withdrawn across the whole of 2025. A separate estimate put cumulative 2026 selling at roughly ₹2.37 lakh crore before the latter part of the month, reinforcing that this is a substantial, sustained trend rather than a one-week blip.
The debt market complicates any purely reassuring reading of the data. The Hindu reported foreign investors were also selling Indian debt during the period, with withdrawals of ₹10,296 crore through the Fully Accessible Route, ₹1,817 crore through the Voluntary Retention Route and ₹1,068 crore through the general route. The Economic Times account, by contrast, emphasized selective debt buying during the same broad window, suggesting that foreign appetite may differ sharply by instrument, maturity and yield, rather than moving uniformly in one direction across asset classes.
Crude, Yields, the Dollar and the Rupee
The Hindu attributed the September selling to three principal factors: higher U.S. interest rates and Treasury yields, elevated crude oil prices amid geopolitical tensions, and weakness in the Indian rupee. Higher U.S. yields raise the return available on dollar assets, encouraging global investors to trim exposure to riskier emerging markets. Elevated crude prices carry particular weight for India as a major oil importer, since costlier energy can widen the trade deficit, pressure the rupee, stoke inflation concerns and dent corporate earnings expectations, while a weaker rupee independently lowers the dollar value of returns for foreign holders of Indian assets.
Domestic institutional investors have helped cushion the impact on headline indices. One September market review cited foreign selling of ₹7,041 crore against domestic institutional buying of ₹36,219 crore for the period under review, with other reports describing sustained domestic support more broadly. Such buying can limit the immediate blow to benchmark indices even as individual stocks face pressure and volatility persists whenever global risk appetite sours.
What Could Change the Trajectory
Gaur indicated that the “next phase” of foreign flows would depend on whether U.S. yields, crude prices and the rupee stabilize enough to make Indian secondary-market assets attractive again, a conditional outlook rather than a firm prediction. Should crude remain near recent highs, yields stay elevated and the rupee continue weakening, foreign selling in liquid, large-cap listed names could persist. Should those pressures ease, investors currently confining their exposure to IPOs, mid- and small-cap names, or selective debt could redeploy capital more broadly across the secondary market, according to the analysis reported by The Economic Times.
The evidence assembled across these reports supports a qualified conclusion: FPI selling remains a genuine and material headwind rooted in global rate, currency and commodity pressures, but the September data do not support a narrative of indiscriminate flight from India. The coexistence of ₹11,490 crore in provisional secondary-market selling, ₹3,843 crore in settled net inflows and ₹5,515 crore in primary-market investment in a single week illustrates why a single headline outflow figure can obscure more than it reveals about the true shape of foreign investor behavior.
