IT Stocks: FIIs withdrew ₹17,000 crore from IT stocks in February. Why are they doing so? What will happen next?

News Topical, Digital Desk : Foreign investors (FIIs) sold heavily from the Indian IT sector in February. According to data, approximately ₹17,000 crore worth of IT shares were sold throughout the month. This is largely due to growing concerns about generative AI, as investors fear that the rapidly expanding use of AI could reduce demand for traditional IT services. Interestingly, despite withdrawing funds from IT, FIIs continued to invest in the Indian stock market overall.

Heavy selling in IT stocks due to AI fears
Foreign investors sold heavily in the IT sector in February. In the first half of the month, FIIs sold approximately ₹10,956 crore worth of IT shares, while the selling continued in the second half, totaling approximately ₹5,993 crore. Thus, the IT sector recorded withdrawals of approximately ₹17,000 crore for the entire month. There is growing concern in the market that the rapid development of generative AI technology could impact traditional IT services.

Until now, the bulk of Indian IT companies' revenues have largely come from human-based coding and IT support services.

However, fearing that the increasing use of AI could reduce demand for these services, foreign investors began booking profits in IT stocks.

Sharp decline in IT company shares
The shares of major IT companies also saw a sharp decline during February.
Infosys shares fell by approximately 20.4%; TCS fell by approximately 18% ; HCL Technologies
fell by approximately 20.1%; Tech Mahindra fell by approximately 23.5%; Persistent Systems fell by approximately 23%; Wipro fell by approximately 17.4%. Consequently, the Nifty IT Index also fell by approximately 20.8% in February. Investment in IT at a four-year low After continuous selling, total FII investment in IT stocks declined to approximately ₹4.18 lakh crore by the end of February. This is the lowest level in the last four years. At the end of January 2026, the investment of FIIs in the IT sector was around ₹5.34 lakh crore. That means it declined by about 21.8% in just one month. If we look at the beginning of 2025, then foreign investors have sold a total of around ₹74,698 crore in IT shares. At that time, the investment of FIIs in the IT sector was around ₹7.3 lakh crore, which has now decreased by about 43%. Selling was also seen in some other sectors . Apart from IT, FIIs withdrew money from some other sectors in the second fortnight of February. Around ₹5,238 crore withdrawn from Consumer Services Around ₹1,775 crore sold off from Telecom Around ₹769 crore withdrawn from FMCG More than ₹350 crore sold off in Chemicals and Consumer Durables FIIs made heavy purchases in many sectors Interestingly, despite selling in IT, foreign investors made heavy purchases in many sectors. In the second week - Investment of around ₹4,103 crore in Capital Goods Purchase of around ₹3,075 crore in Auto sector Investment of around ₹2,742 crore in Construction sector Purchase of around ₹2,359 crore in Metals & Mining Investment of around ₹2,243 crore in Financial Services Investment of around ₹1,234 crore in Power sector Although huge changes were seen at the sector level, FIIs remained overall buyers in the Indian stock market throughout February. During the month, they made a net investment of around ₹15,250 crore in Indian equities. This clearly shows that foreign investors are not completely exiting the market, but are withdrawing money from IT and investing it in other sectors.

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