Sharp Sell-Off: FIIs Withdraw Rs 11,000 Crore From IT Stocks In 15 Days, Holdings Fall To Four-Year Low

This year has begun on a turbulent note for Indian information technology, with February intensifying an already fragile trend as sustained foreign outflows rattled sector heavyweights and pushed sentiment to fresh lows. In just the first fortnight of February 2026, Foreign Institutional Investors withdrew around Rs 10,956 crore, highlighting the scale and speed of the exit.

FII selling has intensified so sharply, pushing total FII holdings to a four-year low. By mid-February 2026, total FII holdings in the IT sector had dropped to Rs 4.49 lakh crore, down 16% from the end of January 2026 and nearly 38% lower than levels at the start of 2025.

So far in 2026, FIIs have sold nearly Rs 12,800 crore worth of IT stocks, the highest selling among all sectors.

The broader trend shows persistent pressure. Four of the last five years have recorded net negative FII flows in the IT sector. Calendar year 2025 marked peak selling at Rs 74,698 crore, the highest in the past five years. In comparison, the entire year of 2023 saw a net sell-off of Rs 7,066 crore, whereas February 2026 alone witnessed nearly Rs 11,000 crore of selling in just 15 days.

January 2026 had already seen net outflows of Rs 1,835 crore. Earlier years also reflect heavy withdrawals, including Rs 71,357 crore in 2022 and Rs 24,043 crore in 2021, while 2024 was an exception with net inflows of Rs 14,914 crore.

The impact has been visible on stock prices. The Nifty IT index declined 15% between Feb. 1 and 15. Among major companies, TCS fell 15.5%, Infosys dropped 17.5%, Wipro declined 11%, HCLTech lost 13% and Tech Mahindra slipped 13%. The sharp correction reflects growing investor concerns and weak near-term sentiment.

What Is Driving The Sell-Off?

Several factors are driving the sell-off. Structural fears around artificial intelligence disrupting traditional managed services models have raised concerns about long-term growth prospects. At the same time, slower global growth is affecting demand visibility for large IT contracts. Ongoing global trade uncertainties and relatively expensive valuations have further added to the pressure, prompting foreign investors to reduce exposure.

Brokerage houses have expressed mixed but cautious views. Jefferies said the “P(AI)n” is not over yet, advising investors to stay selective, lowering earnings per share estimates by 1% to 4% and cutting price targets by up to 33%. JPMorgan noted that AI-related fears are driving a sharp correction.

Nomura believes the current sell-off appears to be a case of front-loading of pain, suggesting that markets may be pricing in future weakness early. UBS, however, believes there has been some near-term overreaction. Citi remains cautious on Indian IT services, citing concerns around AI disruption and reduced participation from domestic institutional investors.

ALSO READ: Jefferies Cuts Ratings On TCS, HCLTech, Infosys, LTIMindtree And More, Says 'P(AI)n Not Over Yet'

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