Foreign Portfolio Investors (FPIs) offloaded Indian equities worth ₹3,962.72 crore during the week ended January 9, 2026, marking a continuation of the selling trend from 2025, according to data from the National Securities Depository Limited (NSDL). The selling pressure intensified significantly in the final two trading sessions of the week.

Weekly Trading Pattern Shows Intensified Selling

The week witnessed heightened selling pressure in the last two trading sessions, with FPIs pulling out substantial amounts from the equity segment. The selling was partially offset by inflows earlier in the week, creating a volatile trading pattern.

Market Impact and Historical Context

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that FII investment in early 2026 has begun with the continuation of the trend from the previous year. In 2025, FIIs had net sold equity worth ₹166,283 crore, impacting the performance of the Indian market and weakening the rupee by approximately 5.00 percent.

The cumulative FPI outflow from the cash market stood at ₹8,017.51 crore as of January 2026, according to inputs from Shrikant Chouhan, Head Equity Research at Kotak Securities. Chouhan reported that the total FII selling from the cash market through January 9 reached ₹11,784 crore.

US Trade Tensions Drive Sentiment

At the beginning of 2026, market expectations centered on FIIs turning buyers due to improvement in GDP growth and corporate earnings. The market also expected the much-delayed US-India treaty to materialize early in the year. However, geopolitical developments took a turn for the worse with US intervention in Venezuela and absence of positive developments on trade talks.

The sell-off intensified after negative commentary from the US commerce secretary, which gave the impression that the trade agreement would be further delayed. This impacted market sentiments and led FIIs to continue selling by increasing the volume of selling in the last two trading days.

Debt Market Activity and Global Context

The debt segment saw mixed activity during the week, with varying flows across different investment routes.

Chouhan observed that global equity markets continued to witness a risk-on rally, while Indian markets widely underperformed. Global market performance was driven by geopolitical events in Venezuela, continued optimism on AI, and improving earnings growth expectations in the US for Q4CY25. Indian markets priced in increasing trade and disruption risks based on news flows and a tepid Q3FY26 earnings season.

Economic Outlook and Sectoral Trends

On the economy front, the National Statistical Office estimated FY26 real GDP growth at 7.40 percent, implying 6.90 percent growth in 2HFY26. Despite DII buying of ₹17,900 crore in January through January 9, Nifty drifted down by 618 points in the week ending January 9, reflecting weak market sentiments.

Sectoral rotation by FPIs in late December reflected valuation discipline and changing macro cues. Pranay Aggarwal, Director and CEO of Stoxkart, noted strong buying in IT led by attractive valuations, rupee depreciation, and optimism around AI-led growth. In contrast, FPIs sold FMCG due to stretched valuations and weak volume growth, while reducing exposure to financial services and auto sectors.

Future Outlook Remains Uncertain

Looking ahead, FPI flows are expected to remain volatile. Sachin Neema, fund manager at Garud Investment Managers, indicated that any further negative news on US-India trade tariffs could exacerbate selling by FIIs. Vijayakumar concluded that for FIIs to turn buyers in India, sentiments need to improve with positive developments on the US-India trade agreement and an uptick in earnings growth.

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.