January may be worst month for the Sensex, foreign investors ruined domestic market

January 2025 is turning out to be a historically bad month for the Indian stock markets. Foreign institutional investors (FIIs) have so far made a net sale of about $7.8 billion (₹63,000 crores), the largest ever in any month of January. This figure is likely to reach close to $8 billion before January ends, making this month the worst start to the year for the Indian markets.

This massive sell-off by FIIs is further increasing the volatility in the Indian markets and has become a matter of concern for investors.

Global economic slowdown and Trump's victory affected investors. Financial, consumer services, power and capital goods sectors were the worst affected.

Bad month for the Indian stock markets

Earlier, the highest monthly sell-off was recorded in October 2024, when FIIs pulled out $11.2 billion. March 2020, the month of the initial phase of the Covid-19 pandemic, also saw selloffs of $8.4 billion. So far in January this year, FIIs have pulled out their investments from various sectors of the Indian stock markets, causing a widespread impact.

Which sector suffered how much?

In the first two weeks of January, FIIs sold the most in the financial sector, where $1.41 billion was withdrawn. Apart from this, $405 million was sold in the consumer services sector, $360 million in the power sector, and $303 million in capital goods. Other sectors like metals, IT, automobiles and construction also saw selloffs of more than $200 million. Due to heavy sell-off in all these sectors, investors have suffered huge losses.

Impact on Sensex and Nifty

The impact of this massive sell-off by FIIs was clearly seen on the Indian markets. The Sensex and Nifty have declined by 3.5% so far in January. This is the biggest decline since January 2017 and has also surpassed the decline of 3.07% recorded in January 2021. Its impact on the broader markets has been even more severe, where the BSE Midcap and Smallcap indices have seen a decline of more than 9%.

Also Read: Huge fall in stock market, Sensex fell 842 points, 8 lakh crores sank in just 2 hours

Analysts' opinion

Experts say that high valuations in Indian markets have also fueled the selling pressure. However, Indian market valuations are now coming down, and analysts expect that the stabilization of US bond yields and the dollar index may provide stability to the Indian markets.

 According to a report by ICICI Securities, if global indicators stabilize, Indian equity markets may get relief.