THEBUSINESSBYES
BUREAU
MUMBAI,
SEPTEMBER 15, 2026
Foreign portfolio
investors (FPIs) have pulled nearly ₹5,109.21 crore from Indian government securities under
the fully accessible route (FAR) over the past three
trading days, as heightened global uncertainty, elevated crude oil prices and
rising US Treasury yields dampened investor sentiment towards emerging-market
debt.
According to data
from the Clearing Corporation of India (CCIL), FPI investment in government
securities under the FAR route stood at ₹3,66,806.286 crore as of September 15, compared with
₹3,71,915.496 crore on September 9. Investments were at ₹3,71,520.751 crore on
September 10 before falling sharply to ₹3,66,791.286 crore on September
11.
Under the FAR
framework, eligible overseas investors are permitted to buy and sell specified
government securities without any investment cap.
“We saw notable selling by FPIs in G-Secs
under the FAR route,” said Mataprasad Pandey, vice president at Choice Wealth.
Elevated crude prices, hovering around $110 a barrel, amid the worsening
US-Iran war situation, US Treasury yields nearing the 5% mark and persistent
pressure on the rupee have made Indian sovereign debt relatively less
attractive to foreign portfolio investors, he said.
Global bond markets
have come under renewed pressure as rising oil prices have intensified concerns
over inflation and the outlook for interest rates. Brent crude prices climbed
after attacks disrupted Saudi Arabia’s East-West pipeline, while planned talks
between Gulf Arab states and Iran were postponed, adding to supply concerns.
Brent crude was trading at $107.41 a barrel.
Meanwhile, the
benchmark 10-year US Treasury yield crossed the 5% threshold on Monday for the
first time since 2023. The move came amid a broad-based sell-off in government
bonds, fuelled by concerns over persistent inflation and rising government and
corporate debt.
Higher borrowing
costs have also pushed debt-servicing expenses in the UK, Germany and other
major economies to multi-year highs, further strengthening the appeal of
developed-market assets.
Typically, higher
interest rates in advanced economies make their financial assets more
attractive to global investors, encouraging capital to move away from
emerging-market debt. Such outflows can raise borrowing costs for emerging
economies and intensify pressure on their currencies.
The rupee's depreciation has added to the pressure. The local currency weakened 42 paise to close at 95.96 against the US dollar on Tuesday, weighed down by elevated Brent crude prices and heightened tensions in the Middle East.
With oil prices elevated, US yields firming and currency risks increasing, foreign investors are turning increasingly cautious on Indian sovereign debt, adding to near-term pressure on domestic bond markets.
