Information technology stocks experienced significant declines on Monday, with the Nifty IT index dropping 3 percent and resulting in over $10 billion in market capitalization losses. This downturn followed news that the U.S. government has instituted a $100,000 fee for new H-1B visa applications, a move that is expected to increase costs for Indian IT firms sending employees to the U.S.
Losses among IT stocks varied, with declines in the range of 1.7 to 3 percent for major firms. Within the Nifty IT index, losses ranged from 1.7 to 4.7 percent, particularly affecting mid-sized companies like Persistent Systems, Coforge, LTIMindtree, and Mphasis, which saw declines between 4.3 and 4.7 percent.
Over the past week, the Nifty IT index has lost over 1,000 points, largely attributed to a slowdown in deal-making in the U.S. and ongoing pricing pressures. While Indian IT companies have gradually reduced their reliance on H-1B visas, the U.S. market still represents nearly 60 percent of their revenues. Analysts expect this latest development to weigh on stock prices in the near term, as investors assess potential protectionist risks, according to a note from ICICI Direct.
Around 71 percent of H-1B visa recipients are individuals from India. Sweta Patodia, AVP at Moody’s Ratings, remarked, “The new H-1B visa fee will raise operating costs for Indian IT services companies. This adds to a possible 25 percent tax under the proposed HIRE Act, if U.S. companies outsource to foreign entities.” The ratings agency noted that steady global demand for IT services could help mitigate some of these rising costs.
Larger firms such as Tata Consultancy Services (Baa1 stable) and Infosys Limited (Baa1 stable) are expected to navigate these challenges better due to their high profitability, robust financial positions, and a growing emphasis on local hiring in recent years.
According to analysts, the new visa fees could impact the earnings of the top 12 IT companies by 14 to 188 basis points, translating into a potential earnings decline of 1.5 to 12 percent. InCred Equities, which downgraded the IT sector’s rating from Overweight to Neutral in February, indicated that the current regulatory changes introduce a “new vector” of macroeconomic uncertainty.
The firm highlighted that rising cost pressures, fewer onsite roles, and potential offshoring of existing onsite positions could pose significant challenges for revenue and EBIT margins in FY27.
Published on September 22, 2025
