Foreign Institutional Investors’ (FIIs) allocation to the Indian technology sector stood at an all-time low of 7.3% at the end of March. Ganesh Shirsekar/file Indian IT companies are facing a double whammy from the advent of artificial intelligence (AI). Not only are future business orders under risk, the increasing use of AI in workflows by the same tech firms is leading to what is called ‘AI deflation’ — or reduction in order values as efficiencies reduce costs, which is then passed on to customers. This, naturally, has hit their share prices, with the National Stock Exchange’s benchmark Nifty IT index down 23% so far in 2026. Infosys and HCL Technologies have fallen 27-28% in that period. Foreign investors, a key player in the capital markets, have taken a particularly tough view of the Indian IT sector, cutting their shareholding in the top companies in FY26 by over three percentage points on average.…