Foreign investors are pulling billions from Indian IT stocks as artificial intelligence threatens to disrupt the software industry. Global funds sold 110 billion rupees ($1.2 billion) worth of Indian IT shares in the first half of February, according to data from National Securities Depository Ltd.

This marks a reversal from December when foreigners turned buyers after a five-month selloff. The AI-driven selloff reflects growing concerns about automation's impact on traditional IT services, which have long been India's economic engine. The country's IT sector employs millions and generates significant export revenue.

Foreigners had briefly returned to the sector in December, but resumed selling in February as AI capabilities advance. The withdrawal underscores how quickly market sentiment can shift when new technologies threaten established business models. Indian IT stocks, which include major players like Tata Consultancy Services and Infosys, have been under pressure as investors reassess their growth prospects in an AI-dominated future.