The share of US-based FPI holdings, across both debt and equity markets, rose from 39.7 per cent in January 2025 to 41 per cent in January 2026, according to a Business Standard analysis of depository data. This comes even as FPIs’ overall have been net sellers by over ₹1 trillion across debt and equity over this period.
US-based FPI investments have also gone up in absolute terms from ₹29.5 trillion to ₹32.1 trillion over the same period. To be sure, this is similar to a trend of rising assets under custody despite outflows across FPIs; but the US has edged ahead. Debt assets of US-based FPIs are up nearly ₹15,000 crore while equity assets rose by over ₹2.5 trillion.
Many FPI positions are in large-cap stocks which have seen some appreciation in the past one year, pointed out Satish Menon, executive director at Geojit Financial Services. The BSE Sensex rose 6.1 per cent between January 2025 and January 2026. This may have offset the decline in assets under custody due to outflows. Menon said that there is no longer an overhang of the trade deal between the US and India. This should help reverse outflows. There may be a willingness to seek other markets among US-based FPIs in light of weaker performance of US equities in the recent past.
Neelesh Surana, the chief investment officer at Mirae Asset Investment Managers (India), noted that India has fallen out of favour with foreign investors for several reasons over the past 18 months. In 2024, Indian markets became relatively expensive compared to global standards, coupled with a slowdown in growth and earnings fatigue.
Additionally, global investors have been focusing on artificial intelligence (AI) opportunities, which are largely absent in India.
However, Surana believes that these three factors are beginning to reverse, indicating that FPI flows should stabilise. He pointed out that the AI trade has already peaked, and India’s economy is now better positioned for a higher earnings growth trajectory, thanks to various monetary and fiscal measures. Furthermore, a necessary time correction and price correction in the Indian markets has made the country more attractive, according to Surana.
“The relative premium has come down,” he said.
Some of the increased FPI assets, despite an overall sell-off in markets, may reflect the holdings of private equity and other institutional shareholders in newly listed companies which may not have been part of FPI holdings earlier, according to a market expert who declined to be identified because he has not seen granular data on the same. There has also been an ongoing shift from jurisdictions such as Mauritius to the home countries of various FPIs, including the US, as authorities frowned on arrangements to reduce taxes. This may also have contributed to the rise in US’ share of total FPIs in recent years.
The gains come in a year when Trump first raised India’s tariffs to higher levels than many neighbours.
