Information technology (IT) stocks took a hit on Monday after the US President Donald Trump passed an executive order on September 19 to increase the H-1B visa application fee to $100,000 from the current $1,000. Following the development, IT majors Tata Consultancy Services (TCS) and Infosys fell more than 2.5% each in afternoon trade. Both companies derive over 50% of their revenue from the US. The BSE IT index was down 2.63% at 35,023. Market watchers believe that the new visa fee will start impacting companies from FY27 onwards, when new petitions are filed.
Hexaware Technologies was the top loser in the BSE IT index, tumbling nearly 7% around 12:05 pm IST. The company generates more than 74% of its revenue from the US. Persistent Systems, Infobeans Technologies, Mphasis, and Coforge were also down over 4% each. Persistent Systems and Mphasis earn more than 80% of their revenue from the US, while Coforge and LTI Mindtree derive 53.9% and 74.8%, respectively, from the market.
Cyient (down 3%), Tech Mahindra (down 3%), Wipro (down 2%), and HCL Technologies (down 1.35%) also traded in the red at the same time. Tech Mahindra and HCL Technologies earn 50.7% and 65.1% of their revenue, respectively, from the US.
Brokerage Nuvama Institutional Equities said in a report that the increase in visa fees is likely to affect the operations and financials of domestic IT companies, though the impact will be limited.
“Indian IT firms have significantly reduced their reliance on H-1B visas over the last eight years, particularly since the start of Trump’s first term. At present, most of their US workforce consists of local hires, with less than half dependent on H-1B visas. This shift has helped mitigate the overall effect of the new fee on these companies,” Nuvama noted.
The brokerage further said the sector is expected to remain volatile in the near term, as uncertainty looms large. The impact on margins or earnings, though theoretical, is likely to be limited as companies explore more cost-efficient ways of doing business. The development also comes at a time when the IT sector has been struggling with slowing client spending, longer deal cycles, and softer discretionary demand weighing on growth and valuations.
Sharing its outlook on the IT sector, Motilal Oswal Financial Services said a major re-rating hinges on the emergence of a new tech cycle and meaningful earnings upgrades. “We continue to prioritise a bottom-up play in IT: HCL Technologies and Tech Mahindra in large caps and Coforge in mid-tier. We prefer Tech Mahindra, as we see early signs of transformation under new leadership and improving execution in BFSI. We continue to like HCL Technologies for its all-weather portfolio,” the brokerage said, adding that Coforge and Hexaware remain its top mid-cap picks.
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