Foreign portfolio investors (FPIs) extended their selling streak in Indian equities, withdrawing ₹14,266 crore during the week ended January 16, according to data from National Securities Depository Limited (NSDL). The relentless outflow came despite domestic institutional investors pumping in ₹16,174 crore, which helped benchmark indices close the week nearly flat.
The weekly net outflow was spread across four trading sessions, with Thursday being a holiday due to BMC elections. On Monday, January 12, FPIs sold equities worth ₹3,686.99 crore, followed by ₹3,108.35 crore on Tuesday, January 13. Wednesday, January 14, saw a marginal dip in selling at ₹429.85 crore, but the pace accelerated sharply on Friday, January 16, when FPIs pulled out ₹3,515.33 crore from Indian stocks.
In dollar terms, the weekly outflow stood at $1,182.70 million, with Friday alone accounting for $389.72 million. The rupee traded in a narrow range during the week, with the conversion rate hovering between ₹90.14 and ₹90.27 per dollar across the four trading sessions.
“As we have stepped into 2026, developments on the FII front have been frustratingly negative. The early hopes of a reversal in FII outflows have clearly been dashed. If anything, the pace of selling has accelerated,” said N ArunaGiri, CEO of TrustLine Holdings. “Over the last 15 months, FIIs have sold close to $45 billion, and there is still no visible turn in sight.”
The selling pressure persisted despite several positive domestic developments, including renewed reforms momentum ahead of the upcoming Budget, early signs of rupee stability and expectations of double-digit earnings growth in FY27. Market participants also noted the cooling off of the AI trade globally, with the Mag7 stocks underperforming the S&P 500 for the first time in months.
“The recent acceleration appears to be driven by renewed tariff-related rhetoric, heightened geopolitical tensions and risk-off soundbites. At the core, in our view, FIIs are currently caught in the momentum-begets-momentum trade in other markets,” ArunaGiri added. “As long as this is working, they are unlikely to turn their attention to India.”
Ross Maxwell, Global Strategy Operations Lead at VT Markets, attributed the cautious stance to global macroeconomic factors. “Elevated US interest rates, uncertainty over the timing of Federal Reserve rate cuts, sticky inflation in advanced economies and a strong US dollar have tightened global liquidity and reduced risk appetite for emerging markets,” he said.
The Nifty 50 concluded the week at 23,694.35, marginally higher by 0.04 per cent, while the BSE Sensex closed at 83,570.35. Bank Nifty outperformed, ending at 60,095.15 with a gain of 1.42 per cent, driven by renewed buying interest in PSU banks.
On the sectoral front, capital markets, PSU banks and metals emerged as top performers, gaining nearly 5 per cent, 4.8 per cent and 4.5 per cent, respectively. Consumer durables, realty and pharmaceuticals underperformed, declining 2.8 per cent, 2.4 per cent and 2.38 per cent, respectively.
In the debt segment, FPIs showed mixed activity. On Wednesday, debt investments saw a sharp net outflow of ₹5,196.17 crore under the general limit category, primarily due to primary market transactions. However, debt-FAR (Fully Accessible Route) witnessed consistent inflows, with ₹1,263.32 crore on Wednesday being the highest single-day investment during the week.
“Either this momentum-begets-momentum cycle in other markets breaks at some point or the pace of earnings upgrades meaningfully accelerates for India. Until one of these plays out, investors must be prepared for drag in the broader markets with persistent FII selling,” ArunaGiri cautioned.
Maxwell maintained that India’s long-term investment appeal remains intact. “While Indian equities trade at a premium to other emerging markets, superior earnings growth, a strong consumption base, infrastructure and manufacturing capex and rapid digitalisation continue to support India’s long-term investment appeal,” he said. “A sustained reversal in flows would likely require clearer signals of Fed easing, a softer dollar, and reduced global volatility.”