Foreign investors are no longer treating Indian equities as a single trade. In the first half of October, they have drawn a clear line: buying the IT breakout while dumping healthcare after three months of heavy accumulation.
The IT sector drew net inflows of Rs 2,599 crore between October 1 and 15, reversing the previous month’s Rs 998 crore outflow. Cumulative buying over the past three-and-a-half months has now touched Rs 9,062 crore. The Nifty IT index rose 10.88 percent in the same period, crushing the Nifty’s 1.67 percent gain.
The index has broken out of its lower-low, lower-high structure on the daily chart and crossed the critical 31,900-32,000 resistance zone, as per SBI Securities latest note. RSI has snapped higher from oversold territory. Seasonality adds another layer of support: November has been positive for Nifty IT in 13 of the last 20 years, with an average gain of 1.23 percent. Stocks showing clean price structure include Coforge, HCL Technologies, Mphasis, Persistent Systems, TCS and Tech Mahindra.
Healthcare tells the opposite story. After attracting Rs 15,779 crore over the previous three months, the sector saw net outflows of Rs 5,497 crore in the first half of October. This was the heaviest outflow since April. The Nifty Healthcare index has broken the neckline of a triple-top pattern, slipped below key moving averages, and sits in the lagging quadrant of the relative rotation graph. Rising ADX readings confirm strengthening downside momentum. Biocon, Fortis, KIMS, Lupin, Mankind Pharma and Max Healthcare are among the names flashing weak technical setups.
This rotation is unfolding against a backdrop of heavy overall FPI selling. Financial services, FMCG and automobiles continued to see large outflows, while services and media managed modest inflows. Broader October equity outflows have already crossed Rs 50,000 crore amid elevated crude, sticky US yields and a strong dollar.