Foreign Investors Withdraw ₹7,608 Crore from Indian Stocks in January

Foreign Portfolio Investors (FPIs) have begun 2026 with significant withdrawals from Indian equity markets. In just the first two trading sessions of January, FPIs exited with a total of ₹7,608 crore. This trend reflects ongoing concerns among foreign investors regarding both global and domestic economic factors.

The selling activity occurred on January 1 and January 2, marking a concerning start to the year. This outflow follows a challenging 2025, during which FPIs withdrew a staggering ₹1.66 lakh crore from Indian stocks. Factors contributing to this record withdrawal included global uncertainties, fluctuations in currency values, trade tensions, and apprehensions about potential tariff measures from the United States.

Impact on the Indian Currency

The sustained selling pressure from FPIs throughout the previous year had a profound impact on the Indian rupee. The currency depreciated by nearly 5 percent against the US dollar in 2025. This trend, coupled with volatile global markets and a strengthening dollar, has led foreign investors to adopt a more cautious stance when considering investments in emerging markets like India.

Despite this weak start to the year, some market experts are optimistic about a potential turnaround as 2026 unfolds. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, expressed that foreign investors may gradually adjust their strategies this year. He pointed to India’s robust economic growth and the possibility of recovery in corporate earnings as factors that could attract renewed foreign investment in the coming months.

Potential for Recovery Amid Challenges

In a similar vein, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, shared an optimistic outlook. He highlighted that improved trade relations between India and the United States, a stable global interest rate environment, and a steady exchange rate between the rupee and the dollar could foster a more favorable atmosphere for FPIs. Furthermore, Khan noted that equity valuations have become more attractive compared to last year, which may entice foreign investors back into the market.

However, experts caution that January is typically a weak month for FPI inflows. Historical data reveals that FPIs have withdrawn funds in eight of the past ten Januarys. As a result, foreign investment flows are expected to remain sensitive to global news, economic indicators, and policy changes in the near term.

In summary, while the early signs for 2026 indicate a cautious approach from foreign investors, there are glimmers of hope for a potential recovery later in the year as market dynamics shift.