Foreign Portfolio Investors (FPIs) extended their selling streak into 2026, offloading ₹3,268.60 crore worth of Indian equities on the first trading day of the year. This marked the eighth consecutive session of net selling by overseas investors, highlighting the persistent exodus of foreign capital from Indian markets.

Sustained Foreign Selling Pressure

The latest selling activity represents a continuation of the significant outflow trend that dominated the previous year. FPIs had offloaded stocks worth ₹3,597.38 crore on New Year's Eve and ₹3,844.00 crore on the preceding Tuesday, demonstrating the sustained nature of foreign divestment.

The overseas investors experienced a major exodus from Indian markets during 2025, primarily driven by the decline in the rupee's value. They net offloaded shares worth ₹1.66 lakh crore during the calendar year, ending with net selling of ₹22,611.00 crore in December alone.

Domestic Institutional Support

Domestic Institutional Investors (DIIs) began the year on a positive note, purchasing ₹1,525.89 crore worth of equities. This buying activity provided partial support against the foreign selling pressure, though it was insufficient to offset the complete outflow.

Market Impact And Trading Summary

The contrasting investment flows resulted in significant market dynamics:

Despite the substantial foreign selling, the Nifty 50 managed to end with a slim gain of 0.06% at 26,146.00, sustaining momentum above the 26,000 mark. The Sensex closed marginally lower by 32 points at 85,188.00. Market breadth remained positive for the second straight session with an advance-decline ratio of 1.14 on the BSE, indicating continued stock-specific opportunities in early January trading.

Foreign institutional investors (FIIs) recorded unprecedented net outflows of Rs 1,58,407 crore from Indian equities in 2025, marking the worst annual selling since FIIs began investing in India.

Record-Breaking Outflow Figures

As of December 27, 2025, the comprehensive data reveals the magnitude of foreign investor withdrawal from Indian equities:

This net outflow of Rs 1,58,407 crore represents the worst annual selling performance by FIIs since they commenced investing in India, surpassing all previous records for capital flight from Indian equity markets.

Comparative Analysis with Previous Year

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, provided crucial context by comparing 2025 performance with the previous year's activity. In 2024, FIIs demonstrated a more balanced approach to Indian markets, with exchange-based selling largely offset by primary market participation.

Vijayakumar emphasized the stark contrast, noting that "while FII activity was relatively balanced in the previous year, with primary market investments offsetting exchange-based selling, 2025 has seen a sharp divergence."

Currency Impact and Market Dynamics

The sustained selling pressure has created significant ripple effects across Indian financial markets, particularly impacting currency stability. Market experts have identified a direct correlation between the intense FII selling and rupee depreciation throughout 2025.

Vijayakumar highlighted this connection, stating that "the sustained selling by FIIs has contributed significantly to the sharp depreciation in INR this year." The massive outflows have created additional pressure on the Indian rupee, demonstrating the interconnected nature of foreign investment flows and currency dynamics.

Future Outlook

Despite the challenging 2025 performance, market strategists are expressing cautious optimism regarding potential recovery in foreign investment flows. Vijayakumar outlined several positive factors that could drive FII return to Indian markets:

• Robust GDP growth prospects
• Expected improvement in corporate earnings
• Strengthening economic fundamentals

He noted that "improvements in fundamentals are likely to attract net FII inflows in 2026," suggesting that the current outflow trend may represent a cyclical rather than structural shift in foreign investor sentiment toward Indian equities.

The historic scale of outflows occurs against a backdrop of continued domestic investor participation and resilient economic indicators, highlighting the complex interplay between global capital flows, currency dynamics, and investor sentiment as 2025 draws to a close.