Weekly Musings – FPI flows for week ended January 23, 2026

19 Jan 2026 , 03:00 PM

FPIS ARE SELLING INDIA FOR MORE THAN ONE REASON

The latest week to January 23, 2026 saw FPI selling to the tune of $(1.22) Billion. That is not surprising as FPIs have been net sellers for quite some time now. If you just look at the last 4 weeks, the FPIs were net sellers to the tune of $(4.59) Billion. In fact, the last time FPIs were net buyers in equities was on January 06, 2026. But why exactly have FPIs been selling so aggressively in Indian equities in recent weeks?

It is a mix of macro and micro factors. Firstly, there was the US forcibly evicting the government in Venezuela and taking their leader captive. For FPIs, it is not about whether the decision was right or wrong. The issue is that it creates geopolitical risk for markets; and that is not good for FPI investments. Trump’s overtures on Greenland are another reason. When there is event risk, it is the emerging markets that FPIs sell aggressively into.

In the Indian context, there are a number of internal challenges too. Government revenues have been tight and fiscal deficit threatens to spill over. The rupee has fallen vertically to almost ₹92/$ and that is making FPIs jittery as it reduces dollar returns on their investments in India. Above all, the Indo-US trade deal has been inordinately delayed and India has not shown any willingness to stop buying oil from Russia. All these factors have added up.

PROOF OF THE PUDDING – LET US LOOK AT FPI FLOWS

The table captures monthly FPI flows into equity and debt for last 5 calendar years.

Calendar Month	FPI Flows Secondary	FPI Flows Primary	FPI Flows Equity	FPI Flows Debt/Hybrid	Overall FPI Flows
Calendar 2022 (₹ Crore)	(146,048.38)	24,608.94	(121,439.44)	(11,375.78)	(132,815.22)
Calendar 2023 (₹ Crore)	1,27,759.75	43,347.14	1,71,106.89	65,954.38	2,37,061.27
Calendar 2024 (₹ Crore)	(1,21,210.21)	1,21,637.15	426.94	1,65,342.98	1,65,769.92
Calendar 2025 (₹ Crore)	(2,40,193.24)	73,909.60	(1,66,283.64)	62,234.51	(1,04,049.13)
Jan-2026 (₹ Crore) #	(34,667.04)	1,068.85	(33,598.19)	5,975.26	(27,622.93)
Total for 2026 (₹ Crore)	(34,667.04)	1,068.85	(33,598.19)	5,975.26	(27,622.93)
Data Source: NSDL (outflows in brackets) (# – Data up to January 23, 2026)

Year 2026 has started off on a negative note for FPI flows with FPI selling at nearly $3.8 Billion in the first 3 weeks of January, with one more week to go. Since 2023, the FPI flows into debt have been positive and that has largely been on the back of the inclusion of Indian bonds into global bond indices. That led to a surge in passive index fund flows into Indian bonds. It offset the aggressive selling by FPIs in equities. However, recent developments have not been too encouraging.

The recent decision by Bloomberg to defer the inclusion of Indian bonds in their Bloomberg Global Index is a setback for Indian bonds. That inclusion was to attract FPI flows of nearly $25 billion into Indian bonds. Now, that is unlikely to happen till the Indian bonds are included in the index and the next review is still some time away. The one factor that is really making the FPIs apprehensive is the vertical fall in the Indian rupee against most hard currencies, which is diluting much of their dollar returns.

WHAT DETERMINED FPI SENTIMENTS IN THE WEEK

For the week to January 23, 2026, FPI outflows were at $(1.22) Billion.

• For the month of December, the core sector growth bounced sharply to 3.72%, with a sharp rebound in steel, cement, coal, and electricity. Oil output was tepid, but that was along expected lines. Core sector growth rallied sharply from negative output growth in October. In fact, November core sector even got upgraded.
• Some of the statements made by Trump on Greenland apparently raised the hackles in Europe. The EU has now decided to put off signing the US-EU trade deal. Trump has threatened to take over Greenland by force and impose penal tariffs on nations that oppose this move. It is very likely there will be a pragmatic mid-way solution.
• The Indo-US trade deal may be delayed but India is moving fast on other trade deals. India recently inked a CEPA with United Arab Emirates to take bilateral trade to $200 Billion by 2032. An Indo-EU trade deal is almost near the finish line and it is clear that India is hedging its trading bets much beyond relying on the US.
• Precious metals (gold and silver), which represent risk-off demand, have continued to rally. Silver at $103/oz and Gold at $4,980/oz are at record highs. Gold has rallied 75% in the last 1 year while silver has rallied 220% in the same period. It clearly shows safe haven buying, which is normally associated with FPIs going slow on EMs like India.
• US GDP growth estimate for Q3-2026 came in at an impressive 4.4%. Combined with 2.9% PCE inflation, it looks very unlikely that the Fed would attempt any rate cut in its FOMC meet next week. It is most likely to maintain status quo on US Fed rates.

HOW SHOULD INVESTORS INTERPRET FPI FLOW TRENDS IN INDIA

Here is the last 4 rolling weeks data on FPI flows in rupee and dollar terms.

Date	FPI Flow (₹ Crore)	Cumulative flows	FPI Flow($ Million)	Cumulative flows
29-Dec-25	-1,672.31	-1,672.31	-186.16	-186.16
30-Dec-25	-2,616.71	-4,289.02	-290.82	-476.98
31-Dec-25	-3,587.10	-7,876.12	-398.82	-875.80
01-Jan-26	-4,568.72	-12,444.84	-508.09	-1,383.89
02-Jan-26	-3,039.52	-15,484.36	-337.81	-1,721.70
05-Jan-26	646.80	-14,837.56	71.77	-1,649.93
06-Jan-26	737.37	-14,100.19	81.68	-1,568.25
07-Jan-26	-16.44	-14,116.63	-1.82	-1,570.07
08-Jan-26	-1,839.01	-15,955.64	-204.46	-1,774.53
09-Jan-26	-3,709.81	-19,665.45	-412.69	-2,187.22
12-Jan-26	-3,686.99	-23,352.44	-409.03	-2,596.25
13-Jan-26	-3,108.35	-26,460.79	-344.65	-2,940.90
14-Jan-26	-429.85	-26,890.64	-47.61	-2,988.51
15-Jan-26	0.00	-26,890.64	0.00	-2,988.51
16-Jan-26	-3,515.33	-30,405.97	-389.72	-3,378.23
19-Jan-26	-4,542.94	-34,948.91	-501.16	-3,879.39
20-Jan-26	-2,062.07	-37,010.98	-226.68	-4,106.07
21-Jan-26	-1,210.45	-38,221.43	-132.96	-4,239.03
22-Jan-26	-988.70	-39,210.13	-107.99	-4,347.02
23-Jan-26	-2,264.18	-41,474.31	-247.23	-4,594.25
Data Source: NSDL

FPIs sold equities worth $4.59 Billion in the last 4 weeks, which translates into an average weekly FPI selling of $1.20 Billion. Here is what investors must take away from FPI flow data.

• Investors often believe that FPI selling should not matter as domestic investors are buying. However, when FPI sell, the impact is felt on the markets and also on the rupee. Hence, it is a double whammy.
• Secondly, FPIs are generally active in the frontline stocks, unlike the retail and domestic institutions which are more active in smaller stocks. Hence FPI selling impact tends to be magnified in terms of index movements.
• Thirdly, FPIs tend to reallocate to other markets. In the last few months, money that went out of India got reinvested in China, Taiwan, South Korea etc. This leads to relative underperformance of Indian equities compared to other emerging market peers.

The moral of the story for investors is that FPI selling does matter to Indian markets in more ways than one. In recent weeks, the FPI selling has been very acute, with no immediate visibility of a revival in FPI flows. That is the big challenge for India Inc.

 

Summary FPI selling has accentuated in recent weeks due to a combination of global event risks, challenges to India’s macros, and a general slowdown in consumption and profits of Indian companies in the recent quarter. These are immediate challenges. Despite the abundant liquidity with domestic investors, the FPI actions continue to matter as their flows not only impact the markets, but also impact the rupee value. In recent months, weak rupee has been a key driver of FPI outflows!