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FII Selling Spree May Persist Until Positive Triggers Emerge: Analysts

Analysts state the trend of foreign institutional investor selling in India may continue until positive triggers for a rally emerge. The market's tepid performance in 2025 occurred despite massive domestic institutional investment offsetting FII outflows. Key reasons include poor earnings growth, elevated valuations, and uncertainty around a US-India trade agreement. The week ahead is data-heavy, with key domestic economic releases expected to influence short-term market direction.

Key Points: FII Selling Trend to Continue Without Positive Triggers

  • Sustained FII selling in January
  • India's underperformance vs global markets
  • Elevated valuations & poor earnings growth
  • AI trade trend dominance continues
  • Data-heavy week ahead for direction
2 min read

FII selling trend may continue till some positive triggers happen: Analysts

Analysts warn foreign investor selling in Indian markets may persist, citing poor earnings, high valuations, and US-India trade uncertainty.

"The underperformance of India vis-a-vis other major markets is continuing in early 2026 also. - Dr VK Vijayakumar"

Mumbai, Jan 18

The foreign institutional investor selling trend may continue in India until some positive triggers for a market rally happen, analysts have said.

The sustained selling by FIIs continued for the week ending January 16. The total FII selling for January (up to 16th) stood at Rs 22,529 crore.

"This month, FIIs were sellers on all days except one. The underperformance of India vis-a-vis other major markets is continuing in early 2026 also. Year-to-date (YTD) return from Nifty stands at -1.73 per cent," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

A significant feature of the market behaviour in 2025 was that India's tepid performance last year ( Nifty return of 10 per cent) was despite the massive DII investment of Rs 7.44 lakh crore, which completely eclipsed the total FII selling of Rs 166,283 crore.

A key reason was the poor earnings growth and the consequent elevated valuations. The continuing suspense over the US-India trade agreement also impacted the sentiments, said analysts.

"The AI trade which dominated stock market trend in 2025 is continuing in early 2026 also. A reversal of this trend might happen sometime in 2026," said Vijayakumar.

Markets largely consolidated last week amid mixed cues and ended almost unchanged. After a volatile start, benchmark indices remained range-bound in the subsequent sessions.

The Nifty and Sensex finally settled at 25,694.35 and 83,570.35, respectively. Broader indices moved largely in line with the benchmarks and ended with modest gains.

"Optimism from better-than-expected Q3 earnings by select large-cap IT companies was offset by tariff-related uncertainties, geopolitical tensions, and continued foreign fund outflows," said Ajit Mishra-SVP, Research, Religare Broking Ltd.

From a flows perspective, FIIs remained net sellers, extending their recent selling trend, he added.

Next week is expected to be data-heavy and crucial for short-term market direction. Key domestic releases include PMI readings for Manufacturing, Services, and Composite. In addition, data on bank loan growth, deposit growth, and foreign exchange reserves will be closely monitored, said analysts.

- IANS

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Reader Comments

S
Sarah B
The data about DIIs investing over 7 lakh crore last year is the real story! It shows domestic confidence is strong. Maybe we rely too much on foreign money. Time for Indian investors to lead the way?
P
Priya S
Elevated valuations are the core issue. Companies need to show better earnings growth to justify these prices. Simply blaming FIIs is not the answer. The market needs a reality check.
R
Rohit P
Bhai, market toh range-bound hi fasega jab tak global tensions kam nahi hote. FIIs are just chasing better returns elsewhere. Patience is key for long-term SIP investors like us. 💪
A
Ananya R
The AI trade dominance is interesting but concerning. It feels like a global bubble. If that reverses, maybe money will flow back to more traditional sectors in India? Next week's PMI data will be crucial.
M
Michael C
As an analyst myself, I find the Indian market's resilience impressive despite the outflows. The DII cushion is a unique strength. However, clarity on trade policy is non-negotiable to attract long-term foreign capital back.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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