FPIs Pull Out Rs 7,608 Crore From Indian Equities In First Two Days Of 2026

Foreign portfolio investors have started 2026 on a cautious note, extending their selling streak from last year by withdrawing Rs 7,608 crore (USD 846 million) from Indian equities in the first two trading sessions of January.

The withdrawal of funds followed the largest outflow of Rs 1.66 lakh crore (USD 18.9 billion) recorded in 2025, triggered by volatile currency movements, global trade tensions and concerns over potential US tariffs, and stretched market valuations.

Impact on the Rupee

This sustained selling pressure by foreign portfolio investors (FPIs) has significantly contributed to the nearly 5 per cent depreciation of the rupee against the dollar during 2025.

However, market experts believe the tide could turn in 2026. To know more about the rupee vs dollar and its impact on the Indian economy, read our in-depth analysis.

Shift in FPI Strategy

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the year is likely to witness a shift in FPI strategy, as improving domestic fundamentals may start attracting net foreign inflows.

A robust GDP growth and the prospects of a recovery in corporate earnings bode well for positive FPI flows in the coming months, he added. For more information on corporate earnings and their impact on the stock market, visit our website.

Normalisation in India-US Trade Relations

Echoing similar views, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said 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 noted that equity valuations have become relatively comforting compared to last year, which could further support a revival in inflows. To learn more about equity valuations and their impact on the stock market, read our expert analysis.

FPI Flows in January

Despite these positive expectations, FPIs have begun 2026 on a cautious note, and according to data from NSDL, they pulled out nearly Rs 7,608 crore from Indian equities between January 1 and 2.

This trend is not unusual, as foreign investors have historically remained guarded in January, having withdrawn funds in eight out of the past ten years, Khan said.

Global Cues and Macroeconomic Developments

Consequently, FPI flows are likely to remain highly sensitive to global cues and macroeconomic developments. While high valuations were a key concern over the past year, that pressure appears to have eased for now, offering some room for optimism going ahead, he added.

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Conclusion

In conclusion, the withdrawal of Rs 7,608 crore by FPIs from Indian equities in the first two days of 2026 is a cautious start to the year. However, market experts believe that the tide could turn in 2026, with improving domestic fundamentals and a favourable backdrop for foreign investors.

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