Indian stock markets fell on Friday after pausing for a day. Both the 30-share BSE Sensex and the NSE Nifty dropped nearly 1 per cent each. The selling pressure was not limited to these main indices, as the broader market also saw heavy losses. Mid-cap and small-cap stocks were hit harder, with both indices falling close to 2 per cent.
Investors remained cautious due to continued selling by foreign investors. According to data from the National Stock Exchange (NSE), foreign institutional investors (FIIs) sold shares worth ₹2,144.06 crore in the previous trading session. On the other hand, domestic institutional investors (DIIs) helped reduce some of the losses by buying equities worth ₹3,877.78 crore.
Market experts said that the trend of FIIs selling and DIIs buying has been going on for a long time. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said this pattern, which was seen throughout 2025, is continuing in 2026 as well. He added that investors are now wondering if foreign investors will return as buyers in the coming months.
He said the Union Budget, which will be presented on February 1, could give some clarity. If the government announces market-friendly policies, it may improve investor confidence.
Vijayakumar also explained that the attitude of foreign investors will depend mainly on the growth of Indian companies’ earnings. Strong and steady profit growth could attract FIIs back into the market. However, since earnings growth may take time and global markets offer cheaper valuations, foreign investors may continue selling for now.
He further said that many FIIs are increasing their short positions and selling shares whenever the market rises due to positive news. This is preventing any strong rally. Meanwhile, the broader market, where foreign investor participation is lower, may see more activity based on the upcoming third-quarter (Q3) corporate results.