FII selling in IT stocks 2026: Foreign investors i.e. Foreign Institutional Investors (FIIs) have started losing their confidence in the Indian IT market. Within the first 15 days of February, these big investors have made huge sales in IT shares. Market experts believe that the biggest fear behind this is the growing power of Artificial Intelligence (AI), which is now directly challenging human coding and IT support jobs.
Foreign investment at 4 year low
According to the latest report of NSDL, in the first fortnight of February itself, FIIs have sold IT shares worth Rs 10,956 crore. The result of this rapid sale is that the total stake of foreign investors in IT companies has come down to Rs 4.49 lakh crore.
This figure is also scary because it is the lowest level in the last four years. If we talk about just one month back i.e. the end of January 2026, then at that time this investment was Rs 5.34 lakh crore. That means, in just 15-20 days, a huge decline of about 16 percent has been recorded. The holding which was at a record level of Rs 7.3 lakh crore at the beginning of 2025, now seems to be falling apart like a house of cards.
IT sector in fear of ‘Generative AI’
The real reason behind this selling is said to be the fear of ‘Generative AI’. Investors are feeling that the way AI is gaining expertise in coding and software development, the need for India’s big IT companies may reduce in the future. A large part of the income of Indian IT companies comes from manpower i.e. coding and support services done by humans. This is the reason why shares of companies like Infosys, TCS and Wipro have been badly hit.
Infosys shares have fallen 16.5 percent so far in February, while TCS and HCL Technologies have fallen by more than 14 percent. Tech Mahindra and Wipro were also not untouched, which saw a weakness of 10 to 12 percent. Overall, the Nifty IT index itself has fallen by 14 percent. A report by JP Morgan also indicates that it is currently difficult to predict what effect the introduction of new technology will have on demand, due to which an environment of uncertainty is created.
Mutual funds also got a big blow
Not only foreign investors, but also the money of domestic mutual funds is getting burnt in the fire of this decline. By February 13, investment by mutual funds in the top 10 IT stocks declined to Rs 3.04 lakh crore, which was Rs 3.56 lakh crore at the end of January. Due to this decline, investors have suffered an estimated loss of about Rs 50,000 crore.
Where are investors investing their money?
On one hand, money is being withdrawn from the IT sector, on the other hand, there are some sectors where foreign investors are spending money freely. This is a kind of ‘sector rotation’. FIIs are now investing their money in capital goods, metal and power sectors. In the first half of February, Rs 8,032 crore was invested in capital goods and Rs 6,175 crore was invested in financial services.
Apart from this, purchases worth Rs 3,279 crore have also been made in metal and mining sector. It is clear from this that investors are now considering it safer to bet on companies related to infrastructure and manufacturing rather than technology. However, like IT, FMCG and healthcare sectors also remained the target of foreign investors, where they continued selling.