IT slump drags Sensex and Nifty down 0.5% after H-1B visa fee hike

IT stocks tumbled after the US raised H-1B visa fees, erasing Rs 85,000 crore in market value and dragging Sensex and Nifty lower, though analysts remain optimistic

Domestic equity benchmarks slipped on Monday as sharp losses in information technology (IT) shares weighed on sentiment after the US announced a steep hike in H-1B visa application fees.

 

The Sensex fell 466 points, or 0.56 per cent, to 82,160, while the Nifty 50 declined 125 points, or 0.5 per cent, to 25,202.

 

The Nifty IT index tumbled 2.95 per cent, with nine of its 10 constituents ending in the red. Heavyweights Tata Consultancy Services, Infosys and Wipro lost around 3 per cent each. The selloff erased more than ₹85,000 crore in market value from the Nifty IT pack.

 

IT has the second-highest weighting in the benchmark indices after banking and hence the performance of IT stocks has a bearing on the performance of the overall markets. 

 

Volatility spiked, with the India Vix rising 6 per cent to 10.6. Broader markets underperformed, with the Nifty Midcap 100 shedding 0.7 per cent and the Nifty Smallcap 100 dropping 1.2 per cent.

 

The slump followed Friday’s announcement by US President Donald Trump’s administration of a $100,000 fee on new H-1B visa applications. Indians accounted for 71 per cent of approved H-1B beneficiaries last year. India’s $283-billion IT industry – which derives 57 per cent of its revenues from the US – has relied heavily on the visa programme and outsourcing to sustain growth.

 

Pharmaceutical counters, also dependent on US business, were the second-largest drag. The Nifty Pharma index lost 1.41 per cent, with 18 of its 20 stocks ending in red.

 

Still, analysts remained constructive. “Despite trade uncertainty and higher H-1B fees, the government’s pro-growth stance through tax cuts and policy easing continues to make Indian equities attractive,” UBS Global Wealth Management said in a note. 

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