Indian IT stocks fell on Friday after a proposed US rule on H-1B petition fees cleared a key White House review, raising fresh concerns for technology companies that rely heavily on the US visa programme. Selling pressure was also compounded by a series of rating downgrades from Kotak Institutional Equities, which lowered its stance on Tata Consultancy Services, Infosys and LTM.
Coforge led the decline among the stocks shown, falling 1.25%, followed by Fractal Analytics at 1.18% and Persistent Systems at 0.96%. TCS declined 0.95%, while HCL Technologies fell 0.69%. Infosys, KPIT Technologies and Zensar Technologies were also lower.
The Department of Homeland Security proposal on H-1B petition fees was cleared by the Office of Information and Regulatory Affairs on Wednesday. The clearance moves the proposal closer to public release.
H-1B Concerns
The development comes after the Trump administration introduced several measures aimed at changing the H-1B programme. Among the biggest changes was a $100,000 fee introduced last year for workers hired from outside the US.
The latest DHS proposal could add to uncertainty for technology companies that depend on the programme to deploy workers in the US. The proposal is identified as RIN 1615-AD20.
DHS has also sent a separate final regulation covering fee requirements for the EB-5 investor visa programme to the White House. An October proposal had called for lower I-526 petition fees for immigrant investors and sought to incorporate provisions of a 2022 reauthorisation law.
Kotak's Downgrade
Kotak Institutional Equities cut its rating on TCS to ‘Add' from ‘Buy' while keeping its target price at Rs 2,450.
The brokerage said large deal wins had helped TCS over the previous three quarters, but argued that these wins had not translated into a meaningful improvement in overall growth.
“Mega deal wins have improved the past three quarters of TCS,” Kotak Equities said, adding that this was positive but not enough to overcome broader growth pressures. Kotak also flagged the limited progress on TCS's acquisition strategy. It said the company's Salesforce services acquisitions had not been followed by further significant moves, while its data centre strategy remained in its early stages.
The brokerage expects TCS revenue growth to improve in FY27 mainly because some earlier, company-specific pressures will not repeat.
Kotak also lowered Infosys to ‘Add' from ‘Buy', with a target price of Rs 1,200. It expects Infosys to trail TCS, HCL Technologies and Cognizant on organic growth in FY27. The loss of a large European account to competitors could also weigh on growth in FY28, it said.
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