Analysts suggest that the trend of foreign institutional investors (FIIs) selling in India may persist until positive market triggers occur. The selling by FIIs has been consistent, with total selling reaching Rs 22,529 crore by January 16. Dr. VK Vijayakumar from Geojit Investments Ltd noted that FIIs have been selling throughout the month, resulting in India’s underperformance compared to other markets in early 2026.
A notable aspect of the market behavior in 2025 was India’s subdued performance despite significant domestic institutional investment, which far exceeded FII selling. The market was affected by poor earnings growth, high valuations, and uncertainty surrounding the US-India trade agreement. Analysts believe that the artificial intelligence (AI) trade trend seen in 2025 is continuing into 2026, with a potential reversal expected later in the year.
Last week, the markets saw consolidation amid mixed signals, with benchmark indices like Nifty and Sensex closing almost unchanged. While select large-cap IT companies reported better-than-expected Q3 earnings, concerns over tariffs, geopolitical tensions, and ongoing foreign fund outflows tempered optimism. FIIs remained net sellers, continuing their recent trend.
The upcoming week is anticipated to be data-intensive and critical for short-term market direction. Key releases include PMI readings for Manufacturing, Services, and Composite sectors, along with data on bank loan growth, deposit growth, and foreign exchange reserves.
