Foreign Institutional Investors (FIIs) have initiated January 2026 with a significant selling streak, divesting domestic equities worth ₹22,530 crore in the first fortnight of the month. This substantial outflow extends a trend observed in December 2025, where FIIs offloaded ₹22,611 crore worth of shares, and contributes to the overall ₹1,66,286 crore in outflows recorded for the year 2025. The intensified selling pressure, which saw ₹14,266 crore withdrawn in just four sessions during a holiday-shortened week, is largely attributed to a confluence of global and domestic factors. Analysts point to persistent tariff-related uncertainties, ongoing geopolitical tensions (such as the US-Iran conflict), and relatively elevated valuations within the Indian market as key drivers behind the FII exodus. Furthermore, the global 'AI trade' is believed to be diverting investor capital towards other markets. This sustained selling has also contributed to a significant depreciation of the Indian Rupee against the US Dollar, which saw a nearly 5% fall in 2025. Conversely, Domestic Institutional Investors (DIIs) have played a crucial counter-balancing role, acting as net buyers. For instance, on January 16, DIIs net bought shares worth ₹3,935 crore, largely offsetting the FII selling on that day. This growing influence of DIIs, fueled by increasing domestic household savings channelled into equities, is making India's stock market more self-anchored and less susceptible to foreign capital swings. Despite the FII outflows, experts suggest that a reversal in this trend could occur later in 2026 if domestic economic conditions improve, corporate earnings recover, and global interest rate environments stabilize. Investors are advised to maintain a cautious approach and focus on prudently managing leverage and position sizes.