IT shares under pressure on revived H1B visa concerns

TCS, Infosys, HCL Tech, Tech Mahindra, Wipro, Tata Elxsi and MindTree were down 2% to 4% on the NSE.

Shares of information technology (IT) companies came under pressure with the Nifty IT index falling 3% after media reports on Thursday suggested that two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent.

Tata Consultancy Services (TCS), Infosys, HCL Technologies, Tech Mahindra, Wipro, Tata Elxsi and MindTree were down 2% to 4% on the National Stock Exchange (NSE).

At 10:43 am; Nifty IT index, the largest loser among sectoral indices, was down 3.1% as compared to 0.04% decline in the Nifty 50 index.

According to a PTI report, a bill backing key changes in the H1-B programme that allows skilled workers from countries like India to fill high-tech jobs in the US has been reintroduced in the US Congress by two lawmakers who claim that it will help crack down on the work visa abuse. CLICK HERE TO READ FULL REPORT.

Meanwhile, according to an analyst at Sharekhan, in Q3FY2017, the performance of the top IT companies will remain subdued, owing to cross-currency headwinds, company-specific issues, furloughs and lower number of working days. Further, the potential change in US visa policies, protectionism and ongoing Brexit-linked uncertainties could delay clients’ CY2017 budget decisions in certain verticals.

“Even as the underlying fundamentals are improving, policy action on immigration and visa regime remains the biggest overhang. This uncertainty, we believe will keep client decision making subdued as they would await clarity on policies. The current valuations do factor in the stricter policy regime but stocks could be under pressure in the near term if any severe than expected action is taken by Mr. Trump,” analysts at Antique Stock Broking said in Q3FY17 results preview.