Foreign Investors Shift from Indian IT to Financial and Capex Sectors Amid AI Concerns

Foreign portfolio investors are reallocating funds from India's IT sector to financials and capital expenditure-linked industries amid concerns over AI-driven disruptions affecting traditional IT revenue models. The IT sector faced slowed growth and margin pressures in 2025 due to global tech spending uncertainties and geopolitical tensions, with challenges intensifying in 2026 as AI prompts structural changes. Meanwhile, financial services and capital goods sectors have attracted increased foreign investment, viewed as more defensive or value-oriented amid market shifts.