FIIs dump Rs 17,000 crore in IT stocks in February amid AI concerns

IT stocks

• Foreign investors sold Rs 17000 crore in IT stocks in February
• FII holdings in IT stocks hit a 4-year low after sharp selloff
• Capital goods and auto stocks saw strong FII buying in February

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Foreign investors sold nearly Rs 6,000 crore worth of IT stocks in the second half of February after offloading around Rs 11,000 crore in the first half of the month, as concerns over the impact of generative artificial intelligence triggered a sharp selloff in the sector.

The heavy selling came amid fears that rapid advances in generative AI could reduce demand for large-scale, human-led coding and IT support services, which remain a key revenue driver for India’s software exporters.

Combined selling by FIIs in IT stocks during February stood at nearly Rs 17,000 crore. Despite the sector-specific selling, FIIs remained net buyers in Indian equities overall, purchasing around Rs 15,250 crore during the month.

Following the selloff, FIIs’ combined investment in IT stocks declined to about Rs 4.18 lakh crore at the end of February, the lowest level in four years. This represents a 21.8 percent drop from Rs 5.34 lakh crore at the end of January 2026, according to NSDL data.

Foreign investors have been consistently reducing exposure to IT stocks since the start of 2025, with cumulative selling of about Rs 74,698 crore during the period. Details of stock-wise stake reductions are expected to be disclosed in the March quarter shareholding patterns.

FII holdings in IT stocks had stood at a record Rs 7.3 lakh crore at the beginning of 2025. With the recent decline in stock prices alongside continued selling, the value of these holdings has fallen about 42.8 percent.

The decline in stock prices during February has been sharp across major IT companies. Infosys fell 20.4 percent during the month, while TCS dropped 18 percent and HCL Technologies declined 20.1 percent. Tech Mahindra fell 23.5 percent, Persistent Systems lost 23 percent, and Wipro declined around 17.4 percent. The Nifty IT index dropped 20.8 percent during the same period.

Apart from IT, FIIs also reduced exposure to a few other sectors in the second half of February. They sold shares worth Rs 5,238 crore in consumer services and Rs 1,775 crore in telecom stocks. FMCG stocks saw selling of around Rs 769 crore, while chemicals and consumer durables witnessed selling of over Rs 350 crore each.

At the same time, several sectors saw strong buying interest from foreign investors in the latter half of the month. Capital goods and auto stocks attracted the highest inflows, with FIIs purchasing shares worth Rs 4,103 crore and Rs 3,075 crore respectively in the second half of February, following purchases of Rs 8,032 crore and Rs 511 crore in the first half.

Construction and metals stocks also saw buying of Rs 2,742 crore and Rs 2,359 crore respectively during the second half, after inflows of Rs 1,745 crore and Rs 3,279 crore in the first half of the month. Financial services and power stocks attracted buying of Rs 2,243 crore and Rs 1,234 crore respectively in the second half of February, after inflows of Rs 6,175 crore and Rs 3,272 crore during the first half.