Indian IT stocks are under significant pressure today, as the sector experiences a sharp fall in early trading. Major companies, including Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, and Tech Mahindra, faced heavy selling, dragging the Nifty IT index down by nearly 2–3%. This sudden drop has raised concerns among investors, prompting the question: What is driving the negative sentiment in Indian IT stocks today? Let’s explore the factors behind this decline.
Before going through the main topic, let’s have a quick view of the Nifty 50 and the Sensex’s performance today.
Market Overview
On September 22, 2025, both the Nifty 50 and Sensex opened lower than their previous close. The Nifty 50 opened at 25,238.10, reached a high of 25,331.70 and a low of 25,151.05, and closed down by 124.70 points (0.49%) at 25,202.35. Meanwhile, the Sensex opened at 82,151.07, moved between 82,583.16 and 81,997.29, and ended with a loss of 466.26 points (0.56%) at 81,159.97.
The Nifty IT index showed significant weakness, falling 2.95% today, followed by the midcap IT and Telecom index, which declined by approximately 2.47%. The Nifty Pharma and Healthcare index also faced downward pressure.
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Key Stocks in Focus
- Tata Consultancy Services (TCS): Facing challenges similar to peers due to rising costs and potential visa policy shifts.
- Infosys and Wipro: Sensitive to overseas deployment policies, while margin pressures continue to weigh on performance.
- Tech Mahindra: Among the worst affected, likely due to high dependence on U.S. on-site projects.
- HCL Tech and Others: Impacted, particularly those heavily reliant on U.S. clients and visa regulations.
Reasons Behind the Decline in Indian IT Stocks
H-1B Visa Fee Increase
A key trigger is the recent U.S. government announcement raising the H-1B visa application fee to $100,000. Indian IT stocks are particularly sensitive to this, as companies rely heavily on the H-1B program to send skilled professionals to the U.S. for client assignments. The fee hike is expected to raise deployment costs, reduce flexibility, and compress margins for on-site contracts. According to Reuters, nearly 57% of revenue for Indian IT companies comes from U.S. clients.
https://www.reuters.com/world/india/indian-it-stocks-slide-amid-us-visa-crackdown-2025-09-22
Margin Pressure and Rising Costs
The visa fee increase makes on-site billing more expensive. IT firms may have to renegotiate contracts or shift more work offshore, which could reduce short-term profitability. Analysts warn that rising compliance and operational costs may further squeeze margins.
Policy Uncertainty & Global Demand Slowdown
Volatility in U.S. technology spending, combined with global economic challenges, has affected the sector. When major clients tighten budgets or delay projects, outsourcing and consulting revenues typically decline. Additionally, changes in regulations or visa rules in key markets create uncertainty, prompting more cautious investment behavior.
Foreign Investor Exit
Concerns over global risks and policy changes, such as the H-1B fee hike, have led foreign institutional investors (FIIs) to reduce exposure to Indian IT stocks. Selling by large institutional holders often triggers further declines, amplifying downward pressure in Indian IT stocks.
Currency and Interest Rate Effects
Although a strong dollar keeps contract costs elevated for Indian IT firms, a weaker rupee can boost dollar-denominated revenue. However, policy constraints or margin pressures may offset these gains. Recent global interest rate cuts could improve the present value of future earnings, providing potential support for valuations.
Key Insights for Investors
Margin squeeze in the near term- Contracts requiring U.S. on-site deployment may face higher costs or revised billing structures.
Shift in business models- A larger portion of work may move offshore from India, while companies may increase local hiring in the U.S. to reduce visa expenses.
Valuation correction may be underway- Stocks previously priced for high growth are being reassessed, with investors applying more cautious discounts to future earnings.
Opportunity for those who believe in structural strength- Firms with strong order books, diversified revenue sources, and effective cost management may recover and emerge stronger.
Conclusion
The decline in Indian IT stocks today is driven by a combination of factors, including policy changes, rising costs, and shifting investor sentiment. The H-1B visa fee hike has intensified other challenges, such as higher operating costs, uncertainty over on-site work, and fears of reduced U.S. demand. While these developments create short-term disruption, companies that adopt flexible strategies like offshore delivery, local hiring, or contract renegotiations may strengthen their position over time.
Investors should closely monitor updates on visa policy implementation, quarterly margin guidance from leading IT firms, and foreign capital flows. The coming weeks will likely indicate whether Indian IT stocks have found a bottom or may experience further declines before rebounding.
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