Information technology (IT) stocks saw heavy selling on domestic bourses on Friday amid reports that the US was planning tightening of visa norms to protect American workers. The reports of changes in the US work visa requirements spooked investor sentiment.
In a separate development, global rating agency Goldman Sachs downgraded IT heavyweights such as Tata Consultancy Services (TCS), Wipro, and Mphasis, citing the IT sector will face cyclical hiccups going ahead. The brokerage also said that the current valuation of IT sector is at a premium to the historical average, as per the report.
Weighed down by the development, the BSE IT index fell over 2 per cent at 14,850 levels with most stocks trading in the red. Infosys was the top loser in the Sensex pack, falling as much as 4 per cent, while shares of India's second-most valuable company TCS declined as much as 2.64 per cent in intraday trade. In comparison, the BSE Sensex was trading at 40,355, down 220 points or 0.54 per cent.
On the National Stock Exchange, Nifty IT index was trading 2 per cent lower at 14,950 with all the 10 stocks in the negative terrain. Shares of Wipro, HCL Tech, Tech Mahindra, Hexaware and Mindtree were trading lower between 1-3 per cent.
The Donald Trump-led US administration is making changes in US H-1B visas to revise the definition of speciality occupation to "increase focus on obtaining the best and the brightest foreign nationals via the H-1B program," reported the Economic Times. The Department of Homeland Security (DHS) has also been proposed a similar set of changes for L-1 visas, used in intra-company transfers. The DHS has also suggested that the ban on the work authorisation for spouses of H-1B visa holders should be implemented by March next year, the report said.
The move could have adverse effects on Indian techies who account for nearly 70 per cent of all H-1B visa holders. Top Indian firms with a presence in the US are Cognizant, Accenture, Capgemini, Wipro, and Infosys.
Edited by Chitranjan Kumar