AI fear is repricing the Indian IT industry.
−49.6%
foreign holdings in Indian IT have nearly halved (₹712,646 Cr → ₹358,900 Cr, Oct-2024 → Sep-2026), while total foreign equity holdings fell −12.5%; metals, services, capital goods and telecom grew (same window) and financials ended near flat (−4.5%)
−17.7% vs −8.1%
trailing year: Nifty IT vs Nifty 50 (gap ~9.6 points; September alone −11.2% vs −6.1%)
The reading — and its limits
The −49.6% is the fall in foreign IT holdings through capital exiting and the rest being repriced down (74.3% of the fall is price, 25.7% net selling, as-of 30-Sep-2026). Crucially, the capital that left IT largely stayed in India — total foreign equity fell far less (−12.5%), and metals, services, capital goods and telecom grew while financials ended near flat — 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 30 September 2026