Analysts note that after a net sale of Rs 1,66,283 crore by FIIs in 2025, which weakened the rupee by about 5 per cent and affected market performance, early 2026 has seen cautious optimism.
“At the beginning of 2026, expectations were that FIIs would turn buyers on improving GDP growth and corporate earnings,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
Analysts also anticipated that the long-delayed US-India trade treaty would boost markets.
However, geopolitical developments, including the US intervention in Venezuela and delays in trade talks, dampened sentiment.
Remarks from the US Commerce Secretary suggested further delays in the trade agreement, prompting FIIs to continue selling in the last two trading days.
FII selling in the cash market through 9 January stood at Rs 11,784 crore, despite domestic institutional investors (DIIs) buying Rs 17,900 crore during the same period. Consequently, the Nifty drifted down by 618 points in the week ending 9 January.
The sell-off hit cyclical and policy-sensitive sectors hardest, with energy, metals, real estate, and banking stocks underperforming amid global trade uncertainties and continued FII selling, noted Ajit Mishra, SVP at Religare Broking.
Amid high volatility, analysts advise a cautious approach. Mishra added that while bargain hunting may trigger short rebounds, sustained gains depend on clarity in earnings, global trade, and FII flows.
With progress in the US-India trade deal and improving corporate results, FIIs could return as net buyers, supporting markets.
Investor sentiment will hinge on global developments and domestic growth, making disciplined strategies essential.
Also Read: Sensex And Nifty Slide About 2.5% This Week Over Global Uncertainty
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