FPI Flows: First Half of January 2026 Sees Equity Outflows of $2.11 Billion

Foreign Portfolio Investors (FPIs) have begun 2026 on a cautious note. The first fortnight of January mirrors the trend seen in December 2025, with sustained selling pressure across Indian equities. Data from NSDL shows that FPIs were net sellers to the tune of $2.11 billion in equities during the first half of January 2026.

What is more concerning is not just the quantum of selling, but its breadth. Out of the 23 sectors tracked under the NSDL classification, 19 sectors witnessed net FPI outflows, indicating a broad-based risk-off approach rather than sector-specific profit booking.

FPIs Remain in Sell Mode in Early January 2026

The intensity of selling in early January has pushed FPI holdings in Indian equities to multi-year lows.

• FPI equity AUM stood at $803 billion as of 15 January 2026
• Total FPI AUM across asset classes declined to $882 billion, also a multi-year low

These numbers highlight a clear reduction in foreign exposure to Indian markets. FPIs appear to be cutting risk aggressively, driven by a combination of global uncertainty, currency pressures, and valuation concerns.

Historically, January is a crucial month for FPIs as it often reflects fresh allocation decisions for the year. The fact that selling has continued into January suggests that risk appetite toward Indian equities remains subdued.

Sector-wise FPI Equity Flows: January 2026 (First Fortnight)

Based on data published by NSDL, net FPI equity outflows during the first half of January 2026 amounted to $(2,108) million. The table below shows sector-wise FPI equity flows under the NSDL sectoral classification.

Sector-wise FPI Equity Flows (USD Million)

Data Source: NSDL

The table clearly shows that FPI selling was not limited to a handful of sectors. Instead, exits were spread across consumption, financials, services, and defensives.

Where FPIs Were Net Buyers

The only sector to witness meaningful FPI buying during the period was Metals & Mining, with inflows of $298 million.

This selective buying can be attributed to:

• Sustained strength in precious and industrial metal prices
• Global interest in commodity-linked assets amid geopolitical uncertainty
• Expectations that India may accelerate a policy framework for rare earth minerals

However, this buying appears tactical rather than a broad endorsement of risk assets.

FMCG, BFSI, and IT Bear the Brunt of Selling

FMCG: Maximum FPI Outflows

The FMCG sector saw the highest selling pressure, with net FPI outflows of $679 million. Key factors include:

• Weak urban consumption trends
• Margin pressure due to input costs
• Shift toward digital-first consumption models
• Adverse impact of recent GST-related changes

Despite its defensive nature, FMCG failed to attract FPI support in the current risk environment.

BFSI and IT: Heavyweight Exits

Two of the largest index sectors, Financial Services (BFSI) and Information Technology, saw combined outflows of $584 million.

• BFSI selling appears largely driven by index-level de-risking
• IT has faced sustained exits due to concerns around AI disruption, slower global tech spending, and cautious enterprise budgets

Given their high index weights, selling in these sectors had a disproportionate impact on headline indices.

Other Sectors Seeing Persistent Outflows

Beyond the major sectors, FPIs also reduced exposure to:

• Consumer Services with outflows of $216 million
• Telecommunication with outflows of $166 million
• Healthcare with outflows of $116 million

In several cases, this selling followed strong rallies over the previous year. FPIs appear to be booking profits in stocks that had seen sharp appreciation.

What Triggered the FPI Selling in January 2026

The current FPI sell-off is being driven by a mix of global and domestic factors.

Geopolitical Uncertainty

Geopolitical risks escalated after:

• The US captured Venezuela’s leader, Nicolas Maduro
• Threats of further action involving Iran
• Tensions over Greenland impacting US–EU relations

Such developments typically result in capital moving away from emerging markets.

Currency and Bond Flow Concerns

The Indian Rupee weakening to around ₹91 per US dollar has added to investor anxiety. Additionally, India’s non-inclusion in Bloomberg’s global bond indices has delayed potential debt inflows of nearly $25 billion.

Valuation Pressures

India’s Buffett Ratio stands at approximately 125%, well above its long-term average of 90%, raising concerns about return potential amid slowing nominal growth.

Trade and Policy Frictions

India’s continued purchase of Russian oil, threats of penal tariffs by the US, and delays in finalising an Indo–US trade deal have further dampened sentiment.

What January FPI Flows Are Signalling

January flows are often a proxy for fresh annual allocations. The sustained selling in early January 2026 suggests that FPIs remain cautious rather than positioning for a near-term rebound.

FPIs appear to be waiting for:

• Improved geopolitical stability
• Currency stabilisation
• Better valuation comfort
• Clear progress on trade negotiations

Until visibility improves, FPI participation in Indian equities is likely to remain selective.

Key Takeaways

• FPIs sold $2.11 billion worth of Indian equities in the first half of January 2026
• Selling was broad-based, spanning 19 out of 23 NSDL sectors
• FPI equity AUM has fallen to a multi-year low of $803 billion
• Metals & Mining was the only sector with meaningful FPI buying
• FMCG, BFSI, and IT saw the heaviest selling pressure
• Geopolitics, currency weakness, valuations, and trade uncertainty continue to weigh on FPI sentiment

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Market and currency data are subject to change. Please consult a SEBI-registered investment adviser before taking any investment decision.