AI fear is repricing the Indian IT industry.
−48.9%
foreign holdings in Indian IT nearly halved (₹712,646 Cr → ₹363,843 Cr, Oct-2024 → Jul-2026), while total foreign equity holdings fell just −7.9% and financials, capital goods, telecom and metals grew
−12.7% vs −0.2%
trailing year: Nifty IT vs Nifty 50
The reading — and its limits
The −48.9% is the fall in foreign IT holdings through capital exiting and the rest being repriced down (~72% of the fall is price, ~28% net selling). Crucially, the capital that left IT largely stayed in India — financials, capital goods, telecom and metals all grew — so this is rotation within India, a verdict on the IT sector, not flight from the country. The driver is read from what the companies and the market say, not from price alone: Indian IT's own filings name an "AI productivity impact," and the correction is described as a structural re-rating of the labour-arbitrage, headcount-to-revenue model. In addition to AI, cyclical concerns are at work — weak US discretionary spend, tariff drag, BFSI (~30% of the sector) under pressure — so the honest reading is AI-structural fear layered on a real cyclical slowdown, with AI being what makes this a re-rating rather than a dip.
Method Foreign-holding rotation computed by us from NSDL's fortnightly sector-wise FPI reports (equity AUC). Index levels from NSE Indices' own historical file. The rotation is window-free; the index comparison is the trailing year (NSE's public cap).
Computed 1 August 2026