FPIs withdraw ₹22,500cr from Indian equities in January
What's the story
Foreign Portfolio Investors (FPIs) have pulled out over ₹22,530 crore (approximately $2.5 billion) from Indian equities this month. The trend follows a massive outflow of ₹1.66 lakh crore ($18.9 billion) in 2025 due to volatile currency fluctuations, global trade tensions, and fears of potential US tariffs on India. The continued withdrawal has contributed to the rupee's nearly 5% depreciation against the dollar during 2025.
Market dynamics
Global factors influencing FPIs's withdrawal
Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech, attributed the continued withdrawal to global market conditions. He said rising US bond yields and a stronger dollar have improved risk-adjusted returns in developed markets, prompting capital reallocation away from emerging markets like India. Morningstar Investment Research India's Himanshu Srivastava echoed this sentiment, noting that elevated US bond yields and dollar strength have made US assets relatively more attractive.
Market conditions
Domestic factors impacting FPIs's sentiment
On the domestic front, V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said relatively high valuations in some segments of the market and mixed cues from the ongoing earnings season have led to profit-booking and portfolio rebalancing by foreign investors. The rupee's continued depreciation has also impacted dollar returns despite stable index levels. He said this selling trend could continue until positive triggers for a sustained market rally emerge.
Trade tensions
FPI selling continues amid trade deal delays
FPIs continued their selling spree into the third week of January 2026, with ₹22,530 crore withdrawn from the Indian stock market so far. This comes as India and the US have yet to finalize a trade deal despite multiple rounds of negotiations. The delay has kept FPIs net sellers in the Indian market for most of 2025, leading to record withdrawals.
Market resilience
Domestic institutional investors provide support amid FPI sell-off
Despite the FPI sell-off, domestic institutional investors (DIIs) have continued to support the Indian stock market. They bought local stocks worth ₹34,076 crore during the same period as FPIs withdrew funds. Dr. Vijayakumar said that India's tepid performance in 2025 was despite massive DII investments of ₹7.44 lakh crore, which completely eclipsed total FII selling of ₹1,66,283 crore.