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 Portfolio Investors (FPIs) have extended their selling streak into 2026, withdrawing Rs 7,608 crore from Indian equities in the first two trading sessions of January, following the record Rs 1.66 lakh crore outflow recorded in 2025.

Record 2025 Outflows and Early 2026 Trends

The latest withdrawal continues the unprecedented selling pressure that marked 2025 as the worst year for foreign investment flows since FPIs began investing in India. The comprehensive data reveals the scale of foreign investor withdrawal:

The 2025 outflows were triggered by volatile currency movements, global trade tensions, concerns over potential US tariffs, and stretched market valuations.

Currency Impact and Market Dynamics

The sustained selling pressure has created significant ripple effects across Indian financial markets. The massive FPI outflows contributed significantly to the rupee's nearly 5.00% depreciation against the dollar during 2025, demonstrating the direct correlation between foreign investment flows and currency stability.

Historical January Patterns

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that the cautious start to 2026 follows historical patterns. Foreign investors have historically remained guarded in January, having withdrawn funds in eight out of the past ten years, making the current trend not entirely unusual.

Expert Outlook for 2026

Despite the challenging start, market experts express optimism for a potential turnaround in FPI sentiment during 2026. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, believes the year is likely to witness a shift in FPI strategy as improving domestic fundamentals may start attracting net foreign inflows.

Khan highlighted that normalisation in India-US trade relations, a benign global interest rate environment, and stability in the USD-INR pair could create a favourable backdrop for foreign investors. He emphasized that equity valuations have become relatively comforting compared to last year, which could further support a revival in inflows.

However, experts caution that FPI flows will likely remain highly sensitive to global cues and macroeconomic developments, with the easing of valuation pressures offering some room for optimism in the months ahead.