FPI outflows at a five-month high of ₹35,962 crore

Foreign institutional investors net sold ₹35,962 crore worth Indian equities in January, the most since August, as per National Securities and Depository Ltd. data.

The calendar year began with a continuation of the same trend from the past year where foreign investors have been selling Indian equities. In all, FIIs sold ₹1,66,286 crore in Indian equities in CY2025.

Foreign fund managers, however, were net buyers of Indian equity through the mutual fund route and have been consistent for about four months now. FII, through mutual funds, net bought ₹312 crore in the four months. The selling in equities coincide with the buying of mutual funds signifying a sense of caution on India.

There is a meaningful flow into global emerging market funds, and India has also benefited making the overall flow look better, wrote Sunil Jain , vice-president at Elara Capital, in a research note.

However, the selling by India-focused funds, those who take a long term view in India, persists. “The current phase has extended into a third consecutive week, with $340 million withdrawn this week, following outflows of $360 million and $320 million in the prior two weeks. The pressure remains concentrated in Japan- and Luxembourg-domiciled funds, which have been the primary sources of selling during this period,” Mr. Jain wrote in the note.

The primary reason behind the foreign investor selling remains weak earnings and rupee depreciation. “The Indian market witnessed a decent Q3FY26 earnings season, with aggregate earnings marginally ahead of expectations until now, while beats were 1.3x of misses in the KIE (Kotak Institutional Equities) coverage universe. FPI flows are expected to remain volatile,” said Shrikant Chouhan, head, equity research, Kotak Securities.