Foreign portfolio investors (FPIs) have continued to pare their exposure to Indian equities in January, remaining net sellers in five of the past seven trading sessions, as last year’s record outflows show little sign of easing.
After offloading a record Rs 1,66,286 crore from Indian stocks in 2025, FPIs have sold a further Rs 11,789 crore so far this month, according to data from the National Securities Depository (NSDL). The sustained selling pressure has weighed on the benchmark Nifty 50 index, which is down 1.71 per cent in January.
Market participants say a combination of renewed tariff threats from the United States, heightened geopolitical uncertainty and currency volatility has kept overseas investors cautious, with these headwinds intensifying in the first two weeks of the year.
Earlier this week, US President Donald Trump warned of additional tariffs on India if New Delhi does not halt its purchases of Russian crude oil. Adding to concerns, a bipartisan bill in the US proposing tariffs of up to 500 per cent on countries buying Russian oil has received Trump’s backing and is now awaiting congressional approval.
Washington has already imposed a base 25 per cent tariff on Indian goods, along with an additional 25 per cent levy linked to India’s continued imports of Russian oil, which the US argues help finance Moscow’s war in Ukraine. These measures have further clouded the outlook for the long-discussed India–US trade deal, which has yet to be finalised despite six rounds of negotiations.
Geopolitical developments elsewhere have also dented risk appetite. Last week’s US military action in Venezuela has heightened global uncertainty, prompting investors to reassess exposure to riskier assets such as emerging market equities.
Analysts note that while domestic institutional flows have provided some support to Indian markets, persistent foreign selling continues to act as a drag on sentiment. Until there is greater clarity on US trade policy, geopolitical tensions and currency stability, FPIs are expected to remain cautious on Indian equities. |
