Foreign Investors Sell ₹17,000 Crore of Indian IT Stocks in February Amid AI Disruption Concerns

India’s information technology sector witnessed notable selling pressure in February as foreign institutional investors (FIIs) reduced exposure to IT stocks. 

As per news reports data indicates that investors offloaded nearly ₹17,000 crore worth of shares during the month. The sell-off reflects growing uncertainty about how artificial intelligence (AI) could reshape the traditional software services model that has supported the sector’s growth for decades.

FII Outflows From IT Stocks in February

Foreign investors significantly reduced holdings in Indian IT companies throughout February. According to market data, FIIs sold around ₹11,000 crore worth of IT shares during the first half of the month.

The selling continued in the second half, with additional outflows of nearly ₹5,993 crore between February 15 and February 28. The cumulative impact resulted in one of the largest monthly outflows from the sector in recent periods.

This trend highlights the caution among global investors as the IT services industry adjusts to technological changes and shifting demand patterns.

Concerns around artificial intelligence are emerging as a key factor behind the cautious outlook. 

Sector Rotation Towards Domestic Growth Themes

The shift in FII investment patterns is not limited to IT stocks alone. Market data shows that foreign investors also reduced exposure to consumer services and telecom sectors during the latter part of February.

At the same time, they increased allocations to sectors linked to domestic economic growth such as capital goods, automobiles, construction, metals, power and financial services.

This rotation suggests that investors are prioritising sectors tied to infrastructure expansion and consumption within the Indian economy.

Read More: 16th Finance Commission Recommendations May Strengthen States’ Fiscal Health Over Time: CRISIL.

Conclusion

The sale of nearly ₹17,000 crore worth of IT shares by foreign institutional investors in February reflects growing uncertainty surrounding the impact of artificial intelligence on India’s technology services sector. 

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