IT shares extend fall; Infosys nears 52-week low
Infosys, TCS, Tech Mahindra, Wipro and HCL Tech were down upto 7% in past two trading sessions.
 "IT shares extend fall; Infosys nears 52-week low")
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Shares of information technology (IT) companies were trading lower for the second straight day after a reform bill has been introduced in the US House of Representatives mandating that the minimum salary of H-1B visa holders will be doubled to US$130,000.
Infosys, Tata Consultancy Services (TCS), Tech Mahindra, Wipro and HCL Technologies were trading down in the range of 1% to 2% on the National Stock Exchange (NSE). All these stocks ended lower by up to 4% on Tuesday.
At 10:01 am; the Nifty IT index, the largest loser among sectoral indices, was down 2% as compared to 0.01% rise in the Nifty 50 index. In past two trading sessions, the IT index dipped 5.2% against 0.81% decline in the benchmark index.
Among the individual stocks, TCS was down 2% at Rs 2,177, extending its Tuesday’s 4.4% decline on the NSE. Infosys was trading at Rs 909, fell 4% in past two trading sessions. The stock hit an intra-day low of Rs 905, quoting close to its 52-week low of Rs 901 touched on November 9, 2016.
The legislation called the High-Skilled Integrity and Fairness Act of 2017 prioritizes market-based allocation of visas to those companies willing to pay as much as 200% of a wage calculated by the survey. The legislation also proposes eliminating the 'lowest pay' category. The raised salary level - to more than $130,000 - is more than double the current H-1B minimum wage of $60,000, which was established in 1989 and has since remained unchanged.
Hike in H-1B visa cost will have significant impact on the financials of the company, as Indian companies while are major users of H-1B visa (according to reports around 85%), though they form very less part of the overall workforce (around 11-15%).Depending upon the companies, they could easily witness around 60-70% rise in the salaries of the H-1B visa dependent workforce, and hence have significant impact on the net profit of the companies, according to Ms. Sarabjit Kour Nangra, VP Research- IT, Angel Broking.
However currently the bill is yet to be passed and most of the companies are looking at mitigating the risk through increasing the local recruitment, more off-shoring, moving offices to low cost states. Thus the real impact will be difficult to pin down and would be depend upon the time when it actually gets implemented; which according to us could take time, said Ms. Sarabjit Kour Nangra.
Overall, the brokerage firm remains positive on the IT sector, and currently maintains picks in the space-HCL Technologies and Infosys.
Infosys, Tata Consultancy Services (TCS), Tech Mahindra, Wipro and HCL Technologies were trading down in the range of 1% to 2% on the National Stock Exchange (NSE). All these stocks ended lower by up to 4% on Tuesday.
At 10:01 am; the Nifty IT index, the largest loser among sectoral indices, was down 2% as compared to 0.01% rise in the Nifty 50 index. In past two trading sessions, the IT index dipped 5.2% against 0.81% decline in the benchmark index.
Among the individual stocks, TCS was down 2% at Rs 2,177, extending its Tuesday’s 4.4% decline on the NSE. Infosys was trading at Rs 909, fell 4% in past two trading sessions. The stock hit an intra-day low of Rs 905, quoting close to its 52-week low of Rs 901 touched on November 9, 2016.
The legislation called the High-Skilled Integrity and Fairness Act of 2017 prioritizes market-based allocation of visas to those companies willing to pay as much as 200% of a wage calculated by the survey. The legislation also proposes eliminating the 'lowest pay' category. The raised salary level - to more than $130,000 - is more than double the current H-1B minimum wage of $60,000, which was established in 1989 and has since remained unchanged.
Hike in H-1B visa cost will have significant impact on the financials of the company, as Indian companies while are major users of H-1B visa (according to reports around 85%), though they form very less part of the overall workforce (around 11-15%).Depending upon the companies, they could easily witness around 60-70% rise in the salaries of the H-1B visa dependent workforce, and hence have significant impact on the net profit of the companies, according to Ms. Sarabjit Kour Nangra, VP Research- IT, Angel Broking.
However currently the bill is yet to be passed and most of the companies are looking at mitigating the risk through increasing the local recruitment, more off-shoring, moving offices to low cost states. Thus the real impact will be difficult to pin down and would be depend upon the time when it actually gets implemented; which according to us could take time, said Ms. Sarabjit Kour Nangra.
Overall, the brokerage firm remains positive on the IT sector, and currently maintains picks in the space-HCL Technologies and Infosys.
| % chg | |||
| Company | LTP | 1-day | 2-days |
| TCS | 2177.00 | -2.4 | -6.7 |
| HCL Technologies | 787.50 | -2.9 | -6.3 |
| Tech Mahindra | 446.20 | -1.3 | -5.4 |
| KPIT Tech. | 128.95 | -0.9 | -4.8 |
| Infosys | 908.95 | -2.1 | -4.3 |
| Tata Elxsi | 1396.90 | -1.9 | -4.2 |
| Mindtree | 448.00 | -0.6 | -3.8 |
| Wipro | 452.75 | -1.1 | -2.8 |
| Nifty IT | 9651.10 | -2.00 | -5.11 |
| Nifty 50 | 8561.95 | 0.01 | -0.82 |
| LTP: Last traded price on NSE in Rs at 10:07 am | |||
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