Source Mint
New Delhi — Foreign Portfolio Investors (FPIs) have kicked off 2026 on a cautious note, offloading Indian equities worth ₹7,608 crore (approximately $846 million) in just the first two trading sessions of January.
This early sell-off follows a turbulent 2025, which saw a record-breaking outflow of ₹1.66 lakh crore ($18.9 billion). The persistent selling by foreign investors has already placed significant pressure on the Indian rupee, which depreciated nearly 5% against the US dollar over the past year.
Why Are FPIs Selling?
According to data from the National Securities Depository Ltd (NSDL), the current withdrawal is driven by a mix of global and domestic factors:
Global Trade Tensions: Renewed concerns over potential US tariff actions and shifting trade policies have made investors wary of emerging markets.
Currency Volatility: The sustained strength of the US dollar and the resulting weakness of the rupee have led FPIs to convert their holdings back into dollars to preserve value.
Historical Patterns: Market analysts note that this “January Chill” is not entirely unexpected. Historically, FPIs have been net sellers in January in eight of the last ten years, often waiting for clearer signals from the Union Budget or global economic cues.
Valuation Watch: While Indian market valuations have cooled slightly from their 2025 peaks, they remain relatively high compared to other emerging markets, leading some institutional investors to remain in “wait-and-watch” mode.
Expert Take: A Turning Tide in 2026?
Despite the rocky start, many market strategists remain optimistic about a recovery later in the year.
“2026 is likely to witness a shift in FPI strategy,” says V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments. “Improving domestic fundamentals, robust GDP growth, and a recovery in corporate earnings could start attracting net foreign inflows in the coming months.”
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, echoed this sentiment, suggesting that a normalization in India-US trade relations and a more stable interest rate environment could create a favorable backdrop for a comeback.
Key Market Signals
What to Watch Next
The market will now turn its attention to the upcoming corporate earnings season and macroeconomic data. Investors are looking for signs of sustained domestic demand and a cooling of global inflation, which could act as the catalyst for FPIs to reverse their selling streak and return to the Indian market.
