₹11,800cr withdrawn in Jan: What's driving FPIs away from India?
What's the story
Foreign portfolio investors (FPIs) have been net sellers in the Indian stock market for five out of the last seven sessions this month. The trend follows a record net outflow of ₹1.66 lakh crore last year. So far in January 2026, FPIs have sold Indian equities worth ₹11,789 crore according to data available on NSDL. This has pushed the Nifty 50 index down by 1.71% so far this month.
Market dynamics
Global factors influencing FPI behavior
The ongoing geopolitical uncertainty, currency volatility, and threats of Trump tariffs are keeping FPIs away from Indian equities. US President Donald Trump recently threatened new tariffs on India if it doesn't suspend its purchase of Russian oil. A bipartisan bill in the US Congress proposing up to 500% tariffs on countries buying Russian oil has Trump's support and is awaiting approval.
Investor concerns
US tariffs and military action impact investor sentiment
The US has already imposed a base 25% tariff on India, plus an additional 25% for its purchase of Russian oil. This has further dented investor sentiment as it creates new hurdles for the elusive India-US trade deal. Last week, US military action against Venezuela heightened global risk aversion, making riskier assets like emerging market equities less lucrative for FPIs.
Market volatility
Currency volatility and trade uncertainty impact FPIs
Santosh Meena, Head of Research at Swastika Investmart, said the main driver is the rising US Dollar and currency volatility. The Indian rupee (INR) fell nearly 5% in 2025, with further weakness eroding dollar returns for foreign investors. This makes them hedge by exiting emerging markets. Nikunj Saraf, CEO of Choice Wealth, said after sharp portfolio adjustments in 2025 many FPIs remain in a capital-preservation mode awaiting clearer signals on global policy direction and growth.
Market outlook
Positive domestic macro environment and future prospects
Despite the global headwinds, the domestic macro environment remains positive. A strong set of earnings could make Indian equities more attractive for FPIs. In Q3FY26, MOSL analysts expect earnings to grow 16% year-on-year (YoY), the highest in eight quarters. CLSA recently reported that India's relative valuations have become more lucrative which could bring back investor interest in India in 2026.