FIIs turn buyers in IT, telecom stocks in second half of October ahead of Diwali

Mumbai: For far too long, they seemed trapped in a dull, drab, and dreary existence. But they are roaring back to life in the run-up to Diwali – and filling the shopping carts of overseas funds.

Technology stocks, the third biggest collectively by weighting on the Nifty, were relative stragglers through most of 2026, as foreign portfolio money was busy chasing the AI play elsewhere in Asia. Through the second half of October, however, IT and telecom have drawn disproportionate interest from FIIs, which continue to sell other pockets of the market.

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FPIs made net purchases of Rs 13,112 crore in Indian equities in the second half of October, after selling more than Rs 47,955 crore in the first half of the month. IT stocks attracted record FPI buying of Rs 10,915 crore in the second half of October, compared with purchases of Rs 2,599 crore in the first half.

The buying followed sustained selling in the sector, with FPIs offloading shares worth Rs 27,784 crore between January and September 2026.

The renewed interest in Indian IT stocks comes amid a global correction in artificial intelligence-related shares, prompting some investors to reassess their exposure to the technology trade.

“Recent selling in AI-related stocks in markets such as South Korea, Taiwan, China and Japan has prompted foreign investors to allocate some money to Indian IT companies,” said Kranthi Bathini, equity strategist at WealthMills Securities. “These stocks have corrected since the beginning of the year and are now trading at more attractive valuations.”

Telecom stocks also attracted record FPI buying of Rs 11,065 crore in the second half of October. The proposed Rs 30,188-crore Jio Telecom IPO is expected to have accounted for a significant portion of these flows, experts said.

This followed FPI selling worth Rs 30,490 crore in the sector between January and the first half of October.

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'Out of Favour'

In contrast, FPIs remained sellers in FMCG and automobile stocks during the second half of October. Oil and gas, metals and financial services stocks also witnessed outflows.

The selling reflects profit booking after the recent market rally, portfolio reallocation and concerns over near-term earnings prospects. The proposed Jio Platforms IPO could also have diverted some funds from the secondary market, said Ravi Singh, chief research officer at Master Capital Services.

In FMCG, investors are assessing the pace of rural and urban demand recovery, pressure from raw material and packaging costs, and elevated valuations. In automobiles, concerns centre on the sustainability of volume growth and the impact of commodity costs on margins.

Oil and gas stocks remain sensitive to crude prices and refining margins, while metal companies are influenced by global commodity prices, Chinese demand and the outlook for global growth. In financials, investors are monitoring credit growth, asset quality, deposit costs and pressure on net interest margins, analysts said.