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Foreign portfolio investors have continued to put pressure on the Indian equity market through persistent selling in January too. According to available data, FPIs have withdrawn more than ₹22,530 crore from Indian equities in just the first sixteen days of the month. This trend comes after an already difficult 2025, during which foreign investors sold equities worth ₹1.66 lakh crore. Market experts believe that the current situation is not driven by short term factors alone, but reflects deeper global and domestic structural pressures. Weakness in the rupee, rising US bond yields and shifting global investment preferences are making the situation more serious.
NSDL data and the complete picture of January outflows
As per data from the National Securities Depository Limited, foreign portfolio investors pulled out a total of ₹22,530 crore from the Indian stock market between January 1 and January 16. On a weekly basis, this selling was spread across four trading sessions. On January 12, FPIs sold shares worth ₹3,686.99 crore. This was followed by another ₹3,108.35 crore of selling on January 13. On January 14, selling slowed somewhat, with an outflow of ₹429.85 crore. However, the pace picked up again on January 16, when FPIs withdrew ₹3,515.33 crore. During the same period, domestic institutional investors invested around ₹34,076 crore in equities, but despite this support, the pressure from foreign selling remained clearly visible in the market.
Global factors, rising US bond yields and a stronger dollar
According to market experts quoted by news agency PTI, the continuous rise in US bond yields and the strength of the US dollar have made risk adjusted returns in developed markets more attractive. Sachin Jasuja, equity head and founding partner at Centricity WealthTech, said that in such an environment, capital is moving out of emerging markets and flowing towards safer and more stable destinations such as the United States. At the same time, geopolitical tensions, uncertainty surrounding global trade and fears of higher US tariffs have reduced investors’ risk appetite. All these factors together are clearly influencing the strategy of FPIs in the Indian market.
India’s weak participation in the AI theme and comparison with Asia
India has underperformed compared to several Asian markets. Countries such as Korea, Taiwan, Japan and China benefited directly from the artificial intelligence hardware and software theme. Technology companies in these markets delivered strong performance, allowing their indices to generate returns comparable to or even better than the US markets. In contrast, India did not have a major AI driven growth story that could push global investors towards aggressive buying. During the peak of the AI investment cycle, India’s stable growth narrative took a back seat, which had a clear impact on FII sentiment.
Weak rupee, valuation concerns and the road ahead
Persistent weakness in the rupee has also emerged as a major concern for foreign investors. During 2025, the rupee depreciated by around five percent against the US dollar, with continuous FPI selling playing an important role in this decline. A weaker currency increases uncertainty around dollar denominated returns for overseas investors. In addition, high valuations in certain market segments and mixed signals from the ongoing earnings season have encouraged foreign investors to book profits. Until the market receives a clear and strong positive trigger, the selling trend by FPIs is likely to continue. However, experts also believe that once the AI hype cools down and India’s stable six to seven percent economic growth regains attention, foreign investors’ perception of the Indian market could gradually improve.
