Foreign portfolio investors (FPIs) have executed a massive tactical pivot in February 2026, rotating capital from the service-oriented IT sector into the "real economy" engines of India. In the first fortnight of February, FPIs injected a net **₹19,675 crore** into Indian equities. This aggressive buying reversed a dismal January that saw outflows of **₹35,962 crore**. This surge represents the highest fortnightly purchase since April 2025, signaling a renewed appetite for domestic growth stories. The capital goods sector emerged as the primary beneficiary, attracting **₹8,032 crore** in foreign inflows. This movement is driven by a record capital expenditure plan in the Union Budget 2026, which prioritizes defense, railways, and semiconductors. Major players like Bharat Heavy Electricals and Dixon Technologies have gained momentum as order backlogs across power and infrastructure platforms accelerate. Financial services and the oil & gas sector also saw substantial interest, with inflows of **₹6,175 crore** and **₹4,678 crore**, respectively. Despite recent volatility in crude prices, the energy sector has been bolstered by stellar refinery earnings, with average gross refining margins (GRMs) jumping **135%** year-on-year to **$11.4 per barrel**. In contrast, the IT sector is grappling with a "perfect storm." Foreign investors offloaded nearly **₹11,000 crore** in IT stocks during the first half of the month. The Nifty IT index has plunged more than **16%** in the last 30 days, hit by fears of "AI revenue deflation." Markets are concerned that advanced AI agents are disrupting the traditional headcount-based billing model, potentially shrinking the billable hours for major firms like TCS and Infosys. Broader market indicators reflect this tug-of-war. The Nifty 50 is currently hovering around the **25,450** level, while the Sensex trades near **83,300**. While institutional selling has created pressure, domestic institutional investors (DIIs) continue to act as a buffer, supported by robust SIP inflows of **₹31,000 crore** per month. The macroeconomic backdrop remains supportive of this sector rotation. India’s GDP growth for Q2 FY26 surprised at **8.2%**, and retail inflation has stabilized at **2.75%**. Furthermore, a landmark trade deal between India and the U.S. has provided a structural boost to export-oriented manufacturing, further encouraging the shift toward tangible industrial assets over software services.