Investors in Indian IT companies saw their combined wealth plunge $9.5 billion (over ₹83,000 crore) on Monday, and the pain may not be over yet.
The hit followed President Donald Trump’s weekend proclamation of a $100,000 one-time fee on new H-1B visas—critical to Indian IT firms’ overseas staffing—sparking heavy selling and a surge in bearish bets in the derivatives market.
Analysts warned the overhang could linger, with rallies likely to be short lived until companies outline strategies to cushion the blow from the visa fee hike.
Sector under pressure
The NSE IT index was the day’s biggest sectoral loser, shedding 2.95%. Heavyweights such as Infosys, TCS, Tech Mahindra, and HCL Technologies fell between 1.7% and 3%.
Midcaps bore sharper blows, with LTI Mindtree, Persistent Systems, Coforge and Mphasis down 4–5%, as the visa fee hike is expected to squeeze their cash flows more than large caps, per NSE data.
Bearish bets pile up
Derivatives activity points to more downside, with a sharp build-up in open interest (OI) accompanying the fall in stock prices. Jump in OI, a measure of money flowing into the market, along with falling stock prices indicates rising bearish sentiment.
The aggregate OI in LTI Mindtree futures jumped 23%, followed by Persistent Systems (18.4%), Mphasis (16.5%), Coforge (14%), Tech Mahindra (13%), Infosys (10.9%), and TCS (8.8%), NSE data showed. Oracle Financial Services Software (OFSS) was the lone gainer among Nifty IT constituents, closing 0.4% higher.
“The reasons for sustained bearishness despite the correction year-to-date is because valuations in certain counters, especially IT midcaps, remain elevated and the lingering uncertainty of the fee hike impact across companies,” said Siddarth Bhamre, head of research (institutional equities), ACMIIL (Pantomath Group).
“Some midcap IT companies trade at one-year forward price-to-earnings (PE) multiples of over 30 times despite earnings growth of below 15%. Downgrades of price and earnings could be a distinct possibility over time,” he added.
So far in 2025, Coforge has corrected 11% and Persistent 18%, while bellwethers like Infosys and TCS are down 20% and 25% respectively, Bloomberg data shows.
To be sure, the Nifty IT index trades at a trailing price to earnings multiple or 25.85 times against its 3 year average of 24.20 times.
Investors await clarity
According to Rajesh Palviya, head of research at Axis Securities, bearish sentiment could persist in the counters until the companies’ management informed the shareholders of a mitigating strategy to “reduce the hit of the H-1B visa hike on their P&L.”
“While a rally can’t be ruled out totally, investors would use price bump-ups to cut their exposure until the companies don’t announce mitigating factors,” Palviya added.
Another indicator flashing red: the ratio between Nifty IT and Nifty remains just above its five-year low at 1.41 as of Monday. The low of 1.38 was touched on September 8, implying the immediate possibility of a further 2% downtick.
Shrikant Chouhan, research head at Kotak Securities, doesn’t rule out a further 5% fall in IT majors and midcaps, adding that a sustained recovery “at present looks unlikely.”
