Foreign portfolio investors (FPIs) continued their selling trend into the new year, withdrawing ₹7,608 crore (about $846 million) from Indian equities during the first two trading sessions of January 2026, according to data released by the National Securities Depository Ltd (NSDL). The early outflows indicate a cautious approach by overseas investors at the start of the year.
The fresh withdrawal follows a significant sell-off in 2025, when FPIs pulled out a record ₹1.66 lakh crore ($18.9 billion) from Indian equities. Last year’s outflows were driven by multiple factors, including sharp currency movements, heightened global trade tensions, concerns over potential US tariff actions, and elevated equity valuations.
Impact on the rupee
Persistent selling by FPIs has played a role in the nearly 5% depreciation of the rupee against the US dollar during 2025. When foreign investors exit domestic markets, they convert rupee holdings into dollars, increasing dollar demand and putting pressure on the local currency.
Despite the cautious start to 2026, market conditions may evolve over the coming months. India’s domestic economic fundamentals, including GDP growth momentum and the outlook for corporate earnings, remain key factors that could influence future foreign investment trends.
Historically, January has often seen conservative positioning by foreign investors. Data shows that FPIs have been net sellers during the month in eight of the last ten years, suggesting that early-year outflows are not uncommon.
Going forward, FPI flows are expected to remain sensitive to global macroeconomic developments, currency stability, and trade-related developments. While valuation concerns that weighed on sentiment last year have moderated, overseas investor participation is likely to depend on clarity around global and domestic economic signals.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers are advised to consult qualified financial professionals before making any investment decisions.
