Foreign portfolio investors continued their sustained withdrawal from Indian equities, marking the fifth consecutive session of net selling on Friday. The persistent outflow reflects growing concerns over global trade dynamics and geopolitical uncertainties affecting investor sentiment.

FPI Outflow Intensifies

Foreign institutional investors net sold equities worth ₹3,769.00 crore on Friday, according to provisional data from the National Stock Exchange. This followed the previous session's outflow of ₹3,367.00 crore, demonstrating the sustained nature of the selloff.

The cumulative outflow from local shares has reached ₹11,790.00 crore since the beginning of the new year, as per data from the National Securities Depository Ltd. This substantial withdrawal highlights the risk-off sentiment among overseas investors.

Domestic Institutions Provide Support

Contrary to foreign investor behavior, domestic institutional investors maintained their buying momentum. They purchased shares worth ₹5,596.00 crore, providing crucial support to the market amid the foreign selling pressure. This divergence in investment patterns between domestic and foreign institutions has been a notable feature of recent trading sessions.

Market Performance Reflects Investor Concerns

Indian benchmark indices extended their losing streak, declining for the fifth consecutive session. The sustained weakness reflects persistent risk-off sentiment driven by multiple factors affecting market confidence.

The broader market underperformed the benchmark indices, with Nifty Midcap100 declining 0.80% and Smallcap100 falling 1.80%. The Nifty 50 experienced a sharp weekly correction of 2.50%, representing one of its weakest performances over the past three months.

Key Market Drivers

Several factors contributed to the prevailing market uncertainty:

• Trade Relations: Uncertainty over US-India tariff discussions continues to weigh on investor sentiment
• Geopolitical Tensions: Escalating concerns over potential US trade measures linked to Russia-related sanctions
• Policy Developments: US Commerce Secretary Howard Lutnick's indication that the India-US trade agreement had been delayed further dampened market mood

Market participants remained cautious ahead of domestic inflation data for December, scheduled for release on Monday. On the global front, investors stayed on the sidelines amid anticipation of a US Supreme Court decision on the validity of Trump tariffs, adding to the overall uncertainty in financial markets.

Foreign Portfolio Investors (FPIs) turned net sellers in the Indian equity market on Monday, offloading shares worth ₹36.00 crore as the benchmark Nifty 50 index retreated from record highs. This marked a sharp reversal from the previous session when overseas investors were net buyers with purchases worth ₹290.00 crore.

Market Performance and FPI Activity

The Nifty 50 index closed at 26,250.30, declining 0.30% from the previous session despite touching a fresh peak of 26,373.20 during intraday trading. The index had closed at an all-time high on Friday, but witnessed mild cooling toward the close on Monday.

Broader FPI Outflow Trend

The Monday selling adds to the significant outflow trend from Foreign Portfolio Investors (FPIs) in recent periods. Overseas funds have withdrawn nearly ₹7,000.00 crore in just the first three days of 2025, continuing the substantial outflow pattern observed in the previous year when they net offloaded Indian equities worth ₹1.66 lakh crore or $19.00 billion.

In contrast to FPI selling, domestic institutional investors remained net buyers, purchasing shares worth ₹1,764.00 crore, providing some support to the market.

Sectoral Performance and Market Sentiment

Market sentiment reflected mixed signals as optimism over healthy third quarter business updates from financials and other companies was tempered by caution surrounding implications of US military action in Venezuela. The broader market indices showed varied performance during the session.

The Nifty Smallcap100 outperformed the broader market, gaining 0.50%, while the Nifty Midcap100 ended 0.20% lower, reflecting selective buying interest in smaller capitalization stocks despite the overall cautious sentiment.