The first fortnight of January 2026 looks almost similar to the first fortnight of December 2025. FPI selling was again intense at $2.11 billion with 19 out of the 23 sectors in the NSDL classification seeing FPI selling. What is also disconcerting is that the FPI AUM in equities as of 15-Jan has fallen to a multi-year low of $803 billion, while the overall FPI AUM has also fallen to a multi-year low of $882 billion. This clearly shows that the FPIs are on sell-mode in India, driven by several factors; both internal and external.  

Here are some key factors that triggered aggressive FPI selling in equities in Jan-2026 

1. Geopolitical risk remains a key factor with the US capturing Maduro of Venezuela and now threatening an assault on Iran and also on Greenland, straining US-EU ties. 
2. The Indian Rupee continues to be a major source of concern at ₹91/$, and the Bloomberg non-inclusion will defer debt inflows of $25 billion into India.
3. Valuations still remain a concern for FPIs, as nominal growth slows. At 125%, the Buffett Ratio (Market Cap / GDP) is way above the long-term average of 90%.
4. India’s sustained buying of Russian oil, threats of penal tariffs by the US, and delays in the Indo-US trade deal also forced the FPIs to sit on the sidelines. 

Based on the FPI flow data published by NSDL for the first fortnight of January 2026, net FPI selling of $(2,108) million shows a clear sell-side bias. 

1.  The only significant buying by FPIs was seen in metals and mining. This can be attributed to a sustained rise in precious and industrial metals as well as hopes that India will push forward quickly with a policy framework for rare earth minerals.
2. On the sell-side, the FMCG sector came in for the maximum selling by the FPIs at $679 million. The reasons range from weak urban demand, negative impact of the GST cuts, pressure on margins, market shift to digital buying models etc.
3. BFSI and IT were two heavyweights that saw combined selling of $584 million in the first half of January. While BFSI was more of an index compression play, FPIs have been paring their positions in IT for some time on fears of big AI impact.
4. The other 3 sectors that saw some consistent selling were consumer services, telecom, and healthcare. It was more of exit in stocks like Eternal, Bharti Airtel, and even Sun Pharma and Divi’s Labs where the last year had seen a sharp rally. 

Normally, January flows are critical as it gives an indication of fresh allocation by the FPIs. However, it looks like FPI sentiments continue to remain negative on Indian equities. Hopefully, things should change once an Indo-US trade deal fructifies.