FPI Outflows

India-US trade deal has lifted market sentiment, prompting optimism for foreign investments. Analysts predict that retail investors' patience will pay off, but not immediately, as mid- and small-cap stocks could see significant gains over the next few years.

FPIs have net sold ₹33,598 crore worth of Indian stocks in January so far, the highest monthly outflows since August 2025. Last year, the FPI selloff hit ₹166,286 crore as foreign investors remained net sellers in eight out of 12 months of 2025.

The domestic currency logged its steepest intraday fall in almost two months.

FPIs extended their selling streak into January 2026, withdrawing ₹22,529 crore amid ongoing trade deal uncertainties with the US. Domestic institutional investors provided support by buying ₹34,076 crore.

After a record net outflow of ₹166,286 crore last year, FPIs have additionally sold Indian equities worth ₹11,789 crore this month, according to data available on NSDL. This has pushed the Nifty 50 index 1.71% lower so far in January.

Since the valuations of India continue to be slightly above long-term trends, India's underperformance could persist in the short term with muted FIIs inflows as external issues persist as a point of ponder for the domestic market.

The rupee opened lower at 89.9525 per US dollar as against its last closing price of 89.87. The currency moved in a narrow range before settling 0.1% down at 89.97.

Foreign portfolio investors sold ₹22,130 worth of Indian stocks in December 2025, contributing to a total outflow of ₹1,58,407 crore for the year. Meanwhile, domestic institutional remain invested, supporting the market amid declining FPI sentiment.

Hopes are high that 2026 will script a different and more positive story. Earnings strength, policy support and a robust macroeconomic setup are expected to be the key forces that could shape the stock market outlook this year.

FIIs have been net sellers of Indian stocks to the tune of over ₹155,000 crore in 2025 so far, largely plagued by a weak Indian rupee, steep 50% tariffs on India by the US President Donald Trump and high valuations and slowdown in earnings.