Foreign Capital Shifts to Value and Financials as Tech Stocks Face Headwinds

Foreign institutional investors have shown renewed interest in Indian equities on 26 February 2026 with value-oriented and financially leveraged stocks attracting the largest share of inflows at the start of the year. According to market flows and trading data, funds moved back into India’s equity markets, drawn by attractive valuations and stronger earnings outlooks in sectors such as financial services and capital goods. This trend comes even as technology stocks, particularly in the information technology space, remain under pressure amid growing concerns over artificial intelligence led disruption and its impact on traditional business models.

Analysts tracking the flows noted that foreign investors pared back positions in IT counters after a prolonged sell-off, but continued to add to portfolios that are rich in banks, select industrial names and value plays that offer more resilient earnings in the near term. The renewed inflows are seen as a vote of confidence in structural themes outside of technology while also signalling a cautious pivot in equity allocations among global asset managers.

Market commentators also pointed to lingering apprehension around advanced AI adoption and its potential effect on revenue streams for software and services firms, a development that has weighed heavily on the IT indices through February 2026. Despite this, the broader inflow picture suggests that India remains on the radar of global portfolio investors, particularly where earnings visibility and macro stability are stronger.