Nifty IT Index Falls Nearly 20% in February as FPI Outflows Hit Highest in a Decade, Worst Drop Since 2008 Crisis

In February 2026, the Nifty IT index declined by around 19.5%, marking its worst monthly performance since September 2008 during the global financial crisis. The sharp fall coincided with heavy selling by foreign investors in the sector.

Data from the National Securities Depository (NSDL) showed that foreign portfolio investors (FPIs) sold IT shares worth around ₹16,949 crore during the month, representing the highest outflow from the sector in the past seven months. Concerns around artificial intelligence disruption and global macroeconomic risks have contributed to the cautious stance taken by foreign investors toward IT stocks.

Reasons Behind the Fall in the Nifty IT Index

• The rapid adoption of AI agents and automation tools is raising concerns that the traditional human-intensive IT services model may face pricing pressure and lower demand in the future.
• Weak Client Spending: Many US clients are delaying large digital transformation projects due to global economic uncertainty, which has reduced revenue visibility for Indian IT companies.
• FPI Selling and Global Uncertainty: Continuous selling by foreign portfolio investors (FPIs), along with concerns around geopolitical tensions and the possibility of a US recession, has affected investor sentiment in the sector.
• Cautious guidance from global IT companies such as Accenture and Capgemini, along with increasing competition and the risk of service commoditisation, has also weighed on sentiment in the sector.

Impact on IT Stocks

The sharp decline in the Nifty IT index during February led to broad-based weakness across the sector, with most large-cap and mid-cap IT companies posting negative monthly returns. The decline in the index was accompanied by negative monthly returns across several large and mid-cap IT companies.

Major IT Stocks See Sharp Decline in February

The correction in the Nifty IT index during February was reflected across most large and mid-cap IT companies, with several stocks reporting double-digit declines during the month. Among the major companies, TCS fell around 23%, while Infosys declined about 23.50% and HCL Tech dropped nearly 20.7%.

Other IT stocks also recorded notable losses, with Wipro falling about 15.15%, Tech Mahindra declining around 24.50%, and LTIMindtree dropping about 17.64% during the month. Mid-tier companies such as Persistent Systems declined around 15.82%, Mphasis fell about 13.48%, while Oracle Financial Services Software saw a marginal decline of around 0.58%. Overall, the data shows that most major IT stocks posted negative returns in February amid sector-wide selling pressure.

Foreign Investors Shift Focus to Other Sectors

Despite the selling seen in IT stocks, foreign portfolio investors did not reduce their overall exposure to Indian equities. In February 2026, FPIs remained net buyers in the broader market, investing around ₹22,615 crore in Indian shares, marking the highest monthly inflow in nearly 17 months.

The investment flows were largely redirected toward sectors such as capital goods, financials, metals, and energy, where the earnings outlook appears relatively stronger

Disclaimer: The article is for informational purposes only and not investment advice.