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Foreign Investors Remain Net Sellers as Indian Markets Underperform in Early 2026
FIIs withdrew ₹22,529 crore from the Indian stock market; learn why the selling continues and what 'positive trigger' experts are waiting for. Read a detailed report on poor earnings and valuations.
Foreign institutional investors (FIIs) remain selling in the Indian stock market. A sell-off was seen for the week ending January 16, 2026. As of January 16, FIIs have sold ₹22,529 crores. FIIs have sold on all days of the month, with only one exception. According to market experts, the Indian market has remained underperforming compared to other major markets since the start of 2026. The Nifty has given a return of 1.73 percent in the year. According to market experts, the selling trend of FIIs in the Indian stock market is expected to continue until some positive trigger emerges for the market to recover.
VK Vijaykumar, Chief Investment Strategist at Geojit Investments Limited, explains that a notable feature of the market's behavior in 2025 was that while the Indian markets performed poorly last year (Nifty returned only 10 percent), domestic institutional investors (DIIs) invested a significant amount of ₹7.44 lakh crore in the market, completely outpacing the total FII sales of ₹166,283 crore. This underperformance was primarily due to poor earnings growth of Indian companies and the resulting elevated valuations. He added that the ongoing suspense over India-US trade talks also impacted sentiment.
Vijaykumar says, "It now appears that the FII selling trend may continue until some positive trigger (either external or internal) emerges to boost the market." Looking at market trends, the trend of artificial intelligence (AI), which dominated the stock market in 2025, is continuing into early 2026. However, this trend could reverse at any time in 2026, and this is important to note.
According to HDFC Securities' 2026 market outlook, concerns about poor earnings growth and the resulting elevated valuations are leading foreign investors to withdraw money from the Indian market. Currently, this capital has shifted to North Asian markets. It is hoped that in 2026, positive news will create an opportunity for a potential market reversal, meaning some positive signals may emerge that could attract foreign investors once again.
