Foreign portfolio investors (FPIs) have started 2026 with caution. Continuing their selloff of last year, they pulled out Rs 7,608 crore from Indian equities in the first two trading sessions of January. In the year 2025, FPI had withdrawn a record Rs 1.66 lakh crore from Indian stocks. This was due to volatile currency movements, global trade tensions and concerns over potential US tariffs, and elevated market valuations.
This sustained selling pressure by foreign portfolio investors has significantly contributed to the rupee depreciating by about 5 per cent against the dollar during 2025. However, market experts believe that the situation may change in 2026.
There may be a change in FPI strategy this year
According to news agency PTI, VK Vijayakumar, Chief Investment Strategist of Geojit Investments, says that there may be a change in the strategy of FPI this year. This is because better domestic fundamentals may start attracting foreign investment. Strong GDP growth and prospects of recovery in corporate earnings bode well for positive FPI flows in the coming months.
Wakarjaved Khan, Senior Fundamental Analyst, Angel One, said normalization of India-US trade relations, a favorable global interest rate environment and stability in the dollar-rupee pair could create a favorable environment for foreign investors. Further said that compared to last year, equity valuations have now become comfortable. This may further support the improvement in inflows.
sailing in january is not unusual
Despite these positive expectations, FPIs have started 2026 cautiously. According to NSDL data, they have pulled out around Rs 7,608 crore from Indian equities between January 1 and 2. According to Khan, this trend is not unusual as foreign investors have historically been cautious in January.
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