FPIs pile into financials, extend IT buying in first half of August

Financial services drew Rs 6,535 crore in FPI inflows between August 1 and 15, while IT stocks attracted another Rs 2,530 crore after strong buying in July

Foreign portfolio investors (FPIs) stepped up their buying in Indian equities in the first half of August, with financial services emerging as the biggest beneficiary of the inflows. The sector attracted a net ₹6,535 crore between August 1 and 15, reversing the ₹2,669 crore outflow in the second half of July.

 

Automobile and auto components followed with ₹4,405 crore, while consumer services and healthcare also saw strong buying. Information technology (IT) stocks, which had emerged as a preferred bet in the second half of July with ₹3,298 crore of inflows, continued to attract overseas investors, receiving another ₹2,530 crore in the first half of August.

   

FPIs remained largely net sellers of Indian IT stocks through the first half of 2026, as concerns over artificial intelligence (AI)-led disruption, slowing technology spending, and weak revenue visibility weighed on the sector. The selling pushed IT stocks into a steep correction, with the Nifty IT index falling nearly 30 per cent in the first half of 2026.

 

The trend, however, reversed sharply in July as the global AI trade unwound. Growing concerns over stretched valuations of AI and semiconductor stocks prompted investors to reassess the relative appeal of Indian IT services firms, which had significantly underperformed. The Nifty IT index jumped 16.7 per cent in July, supported by the FPI buying.

 

"The IT sector emerged as an attractive relative value and mean-reversion trade. The initial concern that Generative AI would rapidly cannibalise IT services billing hours has shifted to view IT majors as the primary execution partners required to modernise legacy enterprise architectures, manage data pipelines, and deploy AI solutions at scale," said Sunil Subramaniam, founder and chief executive officer (CEO) of Sense and Simplicity.

 

FPIs continued to pare exposure to capex and infrastructure-linked sectors in August. Telecommunications saw the steepest outflow at ₹3,322 crore in the first half, followed by capital goods at ₹1,556 crore and power at ₹1,164 crore, while realty and construction also witnessed selling.