Foreign Institutional Investors Continue Selling in Indian Markets Amidst Uncertainty

The Indian stock market is witnessing a continued trend of selling by foreign institutional investors (FIIs), with a net outflow of ₹22,529 crores recorded in January 2026 alone. Analysts suggest that FIIs are maintaining short positions, anticipating further market declines. Despite some support from domestic institutional investors, the market remains under pressure. Key factors influencing this trend include high valuations, weak corporate earnings, and global uncertainties. Experts believe that positive developments could encourage FIIs to return, but for now, caution prevails. Read on for a detailed analysis of the current market situation and expert insights.

By Narendra Chaudhary Jan 18, 2026, 11:25 IST

Current Trends in Indian Stock Market

Mumbai: The trend of selling by foreign institutional investors (FIIs/FPIs) persists in the Indian stock market as we enter 2026. In the first 16 days of January, FIIs recorded a net selling figure of ₹22,529 crores, intensifying pressure on the market. Analysts suggest that FIIs are still maintaining net short positions, indicating their expectation of a market downturn, focusing more on selling rather than buying or short selling to capitalize on declines in the futures and options market.

FII Outflow Statistics for January 2026

Total Net Selling: ₹22,529 crores (in the cash market, as of January 16)

Daily Selling: FIIs have been sellers almost every day, with only one day showing purchases.

2025 Record: In 2025, FIIs recorded a staggering ₹1.66 lakh crores in selling, marking the largest annual outflow in the history of the Indian market.

Domestic Support: Domestic institutional investors (DIIs) provided some support, but the heavy selling by FIIs kept the market under pressure.

Market Performance as of January 18, 2026

Sensex: 83,570.35 (+187.64 points, +0.23%)

Nifty 50: 25,694.35 (+28.75 points, +0.11%)

So far in January, Nifty has declined by approximately 1.5-1.7%, while several Asian markets have shown better performance. The ongoing selling by FIIs continues to contribute to the market's underperformance.

Reasons Behind FII Short Positions

High Valuations: The Indian market appears expensive, especially in light of weak earnings growth.

Weak Corporate Earnings: Q3FY26 (December quarter) results have mixed expectations, with pressure in the IT and other sectors.

Global Factors: Uncertainties in US-India trade, potential US tariffs, and tensions in the Middle East affecting oil prices.

Impact of AI Trading: Global stocks related to AI have performed well in 2025-26, while India has lagged behind.

Capital Flows to North Asia: Some funds are shifting towards China and other Asian markets.

Expert Opinions

VK Vijayakumar from Geojit Investments stated, "FII selling may continue until positive triggers emerge, such as improved earnings, progress in US-India trade deals, or global rate cuts." Other analysts believe that India's strong fundamentals (GDP growth, better earnings) could attract FIIs back in 2026, but currently, caution remains.