FPI net sell Indian Equities worth of $(3.73) Billion in September 2026

FPIS BACK TO SELLING WAYS IN SEPTEMBER 2026

After 2 consecutive months of buying in equities, FPIs were back to selling ways. FPI net selling in September 2026 stood at $(3.73) billion. In June 2026, FPIs had been net sellers of $(5.21) billion, which was offset by buying in July and August. Out of the 23 sectors tracked by NSDL, 14 sectors saw net selling, and 9 sectors saw net buying in Sep-26.

Net selling was dominated by BFSI, Oil & Gas, Auto, Telecom, Metals, and FMCG; while Consumer Services, Other Services, and Healthcare saw focused buying. However, debt market selling in September stood at $(2.36) billion. For the 6 months of FY27; FPIs sold equities worth $(13.60) billion and purchased bonds worth just $1.36 billion.

Data Source: NSDL

WHAT TRIGGERED THE FPI SELLING IN SEPTEMBER 2026?

• The heavy FPI selling in the last 8 quarters has resulted in a sharp fall in the FPI assets under custody (AUC). Between Sep-24 and Sep-26, the FPI equity AUC fell by -26.0% from $931 billion to $689 billion. Overall FPI AUC (including debt) fell -23.7% from $1,007 billion to $768 billion in this period.

• While the $133 billion inflow from the FCNR(B) window has given some relief to the dollar situation, it has also resulted in substantial domestic liquidity and dollar forward positions surging to $200 billion. Rupee continues to be under pressure.

• With the central banks like the Federal Reserve, ECB, Bank of Japan, and Reserve Bank of Australia having hiked benchmark rates, the RBI is also expected to hike rates by 25 bps in October 2026. That is likely to put pressure on bonds and equities.

• From an FPI perspective, dollar-adjusted P/E ratio at 21-22X continues to be steep. Markets like South Korea and China offer much lower valuations with AI strengths; while Brazil is almost in single-digit P/E with a massive commodity franchise.

• The combination of elevated crude prices, weak rupee, and rising rates could keep FPI flows into equity and debt under pressure. Persistent selling by FPIs was seen in September: $(1.47) billion in first fortnight and $(2.26) billion in second fortnight.

SECTORAL COLOUR OF FPI FLOWS IN SEPTEMBER 2026

FPI selling seems to be permeating across more themes in September.

• At $(1.37) billion, FPI selling in BFSI was at elevated levels. With the FCNR(B) flows done, the banks now have to face the reality of compression in net interest margins (NIM). However, rate hikes are likely to offer relief to bank bottom-lines.

• For September 2026, the Oil & Gas and Metals & Mining sectors saw combined net selling of $(1.03) billion. Both the sectors have been hit by the impediments to free movement of commodities due to the supply chain constraints caused by war.

• The automobile sector saw net selling of $(647) million in September. While rising crude prices and higher interest rates are an area of concern, what really spoilt the party for auto stocks was the sharp fall in tractor sales due to weak rural demand.

• The capex driven sectors like Power, Telecom, and Capital Goods saw combined net selling of $(738) million by FPIs. Apart from slowing capex in H1FY27, these sectors were also hit by prolonged Gulf conflict as well as higher funding cost concerns.

• Among the defensive plays; FMCG and IT saw combined net selling of $(416) million. FMCG has been hit by weak rural demand and rising crude prices. IT sector, on the other hand, saw the (Sell-AI / Buy-IT) trade gradually unwinding in global markets.

• Finally, there was some positive news on the buy side too. The FPI buying was restricted to specific sectors like consumer services, other services, and healthcare. While the customer facing sectors saw buying on domestic demand, healthcare saw buying interest as a defensive play and also its big CDMO and patent expiry stories.

The hopes generated by FPI buying in July and August appear to have been short-lived. While macros are a concern, it is the challenging relative valuations and the prospects of weak dollar returns that is really keep FPIs cautious!