Indian shares fall as US visa crackdown triggers near USD10bn sell-off in IT stocks

MUMBAI: Indian equity benchmarks declined on Monday, dragged by key information technology stocks that lost roughly USD10 billion in combined market capitalisation after the US unveiled a steep fee on new H-1B visa applications.

The Nifty 50 slipped 0.49 percent to 25,202.35, while the BSE Sensex dropped 0.56 percent to 82,159.97.

The broader small-cap and mid-cap indices also declined 1.2 percent and 0.7 percent, respectively.

The Nifty IT index, the second-heaviest sector on the benchmarks, tumbled 3 percent, with nine of its 10 constituents in the red.

Infosys, TCS, Tech Mahindra and Wipro declined about 2.2 percent-3.1 percent, leading the Nifty 50 losers. The sell-off erased around 854.33 billion rupees (USD9.67 billion) in market value from the IT gauge.

On Friday, US President Donald Trump’s administration announced a USD100,000 fee on new H-1B applications.

Indians made up 71 percent of approved H-1B beneficiaries last year. India’s USD283 billion IT industry, which derives 57 percent of revenue from the US, has long leaned on the visa program and outsourcing to support growth.

“The new H-1B visa fee will raise operating costs for Indian IT services companies,” said Sweta Patodia, assistant vice president at Moody’s Ratings. “It adds to the threat of a possible 25 percent outsourcing tax under the proposed HIRE Act.”

Pharma stocks, which also rely heavily on US revenues, also fell 1.4 percent. Ten of the other 14 major sectors declined, as foreign investors likely stepped up their selling, according to analysts.

“Despite trade uncertainty and higher H-1B fees, the government’s pro-growth stance through tax cuts and policy easing still makes Indian equities attractive,” UBS Global Wealth Management said in a note.

Among other stocks, Adani group companies extended gains after regulators dismissed two Hindenburg allegations. Adani Power surged 20 percent on news SBI Mutual Fund and Citadel Securities bought shares offloaded by GQG.