Analysts on Sunday said that foreign institutional investors (FIIs) will turn buyers in India with positive developments on the US-India trade agreement and uptick in earnings growth, which will improve investor sentiment.
FII investment in early 2026 has begun with the continuation of the trend of the previous year.
In 2025, FIIs had net sold equity for Rs 166,283 crore, impacting the performance of the Indian market and also weakening the rupee by about 5 per cent.
“At the beginning of 2026, the expectation was that FIIs will turn buyers on improvement in GDP growth and corporate earnings,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
Also, the market expectation was that the much delayed US-India treaty will materialise early in the year.
“But geopolitical developments took a turn for the worse with the US intervention in Venezuela and absence of positive developments on the trade talks. Some negative comments from the US commerce secretary gave the impression that the trade agreement will be further delayed,” he noted.
This impacted the market sentiments and FIIs continued selling by increasing the volume of selling in the last two trading days.
The total FII selling (cash market) through January 9 stood at Rs 11,784 crore.
The market sentiments have turned weak that despite DII buying of Rs 17,900 crore in January through 9, Nifty drifted down by 618 points in the week ending January 9.
The sell-off last week was broad-based, with cyclical and policy-sensitive sectors bearing the brunt of the correction.
Energy, metals, and realty stocks emerged as the top laggards, weighed down by concerns over global trade disruptions, commodity demand uncertainty, and risk-off positioning. Banking stocks also declined, with Bank Nifty underperforming the broader market amid cautious sentiment and persistent FII selling, said Ajit Mishra – SVP, Research, Religare Broking Ltd
In the current environment of heightened volatility and global uncertainty, a cautious and disciplined approach is advisable.
“While bargain hunting could lead to intermittent rebounds after the sharp correction, sustained upside is likely to remain capped until greater clarity emerges on earnings, global trade developments, and FII flows,” said Mishra.
