Foreign institutional investors (FIIs) have sold about $1.6 billion in Indian equities in September, the most since January 2023. This trend was driven by elevated valuations in the domestic market and negative global cues, analysts said.

The Sensex and Nifty indexes gained about 12% each since April as foreign investors bought about $17 billion worth of shares on improved Indian macroeconomic conditions. However, analysts raised concerns about elevated valuations resulting from this rally.

The global markets have been under pressure recently due to factors such as a housing crisis in China sparked by Evergrande's missed bond payment, rising US treasury yields, and higher global crude oil prices. Investors are concerned about the potential for prolonged global interest rate hikes and the impact of higher oil prices.