7 hrs ago
FPIs pull ₹5,109 crore from Indian bonds amid uncertainty
Foreign investors sold some Indian government bonds over three trading days.
They withdrew about ₹5,109 crore through a route that lets eligible overseas investors buy certain bonds without an investment limit.
Oil prices rose after attacks disrupted an important pipeline in Saudi Arabia.
Expensive oil can make India’s imports cost more and put pressure on the rupee.
US government bond yields also rose above 5 percent.
This made US bonds look safer or more attractive to some investors.
Several experts said the selling was concerning, but others said it might simply reflect investors seeking better returns or needing cash.
India’s large foreign-exchange reserves provide some protection, although global market movements can still affect Indian investments.
Foreign portfolio investors withdrew ₹5,109.21 crore from Indian government securities under the Fully Accessible Route between September 9 and September 15, 2026.
Clearing Corporation of India data showed holdings falling from ₹371,915.496 crore to ₹366,806.286 crore during that period.
Analysts linked the selling to higher crude prices, rising US Treasury yields, global bond-market pressure and rupee depreciation.
Brent crude traded at $107.41 per barrel after attacks disrupted Saudi Arabia’s East-West pipeline and raised supply concerns.
The rupee fell 42 paise to close at ₹95.96 per US dollar, while foreign investors also sold ₹13,138 crore of Indian equities in September’s first half.
- Who
- Foreign portfolio investors sold Indian government securities; analysts and officials including Hemindra Hazari, Mataprasad Pandey, Kunj Bansal, R. Gopalan and V. Anantha Nageswaran commented on the market.
- What
- Investors withdrew ₹5,109.21 crore from government securities traded under the Fully Accessible Route.
- Where
- India’s government-bond and currency markets, amid global bond-market and Middle East-related pressures.
- When
- The withdrawal was reported for the period from September 9 to September 15, 2026, with the report published on September 15.
- Why
- Higher crude prices, US Treasury yields near or above 5 percent, global uncertainty, and pressure on the rupee reduced the relative appeal of Indian bonds for some investors.
Concerned View
Cautious Reassurance
Meaning of the bond outflow
Concerned View
Hemindra Hazari called the foreign selling “not a healthy sign” and said geopolitical tensions and higher crude prices were creating a difficult external environment for India.
Cautious Reassurance
R. Gopalan said capital routinely moves toward markets offering better returns, while Kunj Bansal said the outflow might reflect liquidity needs or the relative attractiveness of US Treasuries rather than a specific loss of confidence in India.
Impact on India
Concerned View
Higher oil prices could increase India’s import bill, inflationary pressures and pressure on the rupee, while global yields could raise borrowing costs.
Cautious Reassurance
V. Anantha Nageswaran said the Indian economy was more likely to remain resilient than become vulnerable, and India’s roughly $785 billion in reserves provide a substantial buffer against external shocks.
Investor motivation
Concerned View
The simultaneous rise in US yields and fall in emerging-market currencies was described as a “flight to safety” toward US government securities.
Cautious Reassurance
Bansal said it was too early to conclude that investors had specifically turned negative on India because the selling could have several causes, including liquidity requirements or broader emerging-market flows.
Key facts
- FPI bond withdrawal
- ₹5,109.21 crore between September 9 and September 15, 2026
- Holdings on September 9
- ₹371,915.496 crore
- Holdings on September 15
- ₹366,806.286 crore
- Investment route
- The Fully Accessible Route allows eligible overseas investors to trade certain government securities without an investment cap
- Brent crude
- $107.41 per barrel; one analyst described prices as hovering around $110
- US Treasury yield
- The 10-year yield crossed 5 percent on Monday, its first such level since 2023 according to the reports
- Rupee movement
- The rupee fell 42 paise to close at ₹95.96 per US dollar; one report separately cited an intraday level around ₹95.92
- Foreign-exchange reserves
- India’s reserves were reported at around $785 billion
Quotes
Hemindra Hazari
Sebi-registered independent research analyst
“Certainly a negative development, but their decision to pull out could be driven by several factors. It could reflect their own need for liquidity, while the 10-year United States Treasury yield of around 5 per cent offered a relatively safe investment avenue compared with bonds in countries such as India”
telegraphindia.com
“The bonds which people invest in from abroad do exit. Maybe they are hoping that US bonds may have a higher coupon rate as we go along and therefore they would be trying to get a better return by going into those. It’s a possible thing in markets. Money moves depending on where you get a higher income”
telegraphindia.com
Mataprasad Pandey
Vice president at Choice Wealth
“We saw notable selling by FPIs in G-Secs under the FAR route. Elevated crude prices, hovering around $110 amid the worsening US-Iran war situation, coupled with US Treasury yields nearing the 5 per cent mark and persistent pressure on the rupee, have made Indian sovereign debt relatively less attractive to foreign portfolio investors.”
thehindubusinessline.com
Sources
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