IT sector rallies 3% despite US green card suspension fears

Indian IT Sector Defies Visa Concerns with 3% Rally

Despite fears surrounding US visa restrictions, Indian IT stocks surged, buoyed by strong quarterly results and a shift in hiring practices.

Strong Performance Amidst Visa Worries

On Friday, the Indian IT sector demonstrated remarkable resilience, with the Nifty IT index climbing 3.13% to reach 28,604 during intraday trading. This surge came despite the US government’s recent suspension of several Indian IT firms from the Permanent Labour Certification Programme, raising concerns about hiring and compliance costs. However, the sector’s upbeat performance was largely attributed to encouraging quarterly results from TCS, which reported a net profit increase of 14.9% year-on-year for Q2FY27.

TCS Leads the Charge

TCS emerged as the top gainer among its peers, with shares rising 4.61% to ₹2,171.7 following its robust earnings report. The company’s revenue grew by 11.2% to ₹73,188 crore, showcasing its ability to navigate global uncertainties and the challenges posed by AI-led disruptions. Analysts are optimistic, with many maintaining bullish ratings on TCS, projecting potential returns of up to 26% from its last closing price.

Shift in Visa Hiring Practices

The recent suspension of firms like Cognizant, Infosys, and Wipro from the US visa program has raised alarms about increased hiring costs. However, experts suggest that this is more a formalization of existing trends rather than a new challenge. G Chokkalingam, founder of Equinomics Research, noted that Indian IT companies have already been tightening their H-1B visa hiring practices due to rising costs, which has led to a significant reduction in H-1B registrations over the past decade.

Market Sentiment and Future Outlook

The positive sentiment in the IT sector is further supported by the depreciation of the Indian rupee, which has improved profitability in local currency terms. With TCS’s strong quarterly performance setting a hopeful precedent, other companies in the sector may follow suit in their upcoming earnings reports. Brokerages remain optimistic, with expectations of continued growth despite the challenges posed by visa restrictions.

Key Highlights

• Nifty IT index rose 3.13% to 28,604 during intraday trading.
• TCS reported a net profit of ₹13,884 crore for Q2FY27, up 14.9% YoY.
• Visa hiring practices have tightened significantly, reducing H-1B registrations.
• Most brokerages maintain bullish views on TCS stock, projecting up to 26% returns.
• The depreciation of the rupee has positively impacted profitability for IT firms.

Investor Note: The Indian IT sector’s ability to rally despite visa concerns reflects underlying strengths and adaptability. Investors should monitor upcoming earnings reports and broader market trends as they assess potential opportunities in this resilient sector.