IT stocks could remain under pressure on Friday, October 9, as and weak revenue growth at Tata Consultancy Services (TCS) weigh on sentiment. This comes even as GIFT Nifty signalled a positive start for the domestic market.
GIFT Nifty was trading at 22,365, up 110 points or 0.49%, at 7:46 am. However, the positive signal follows a sharp sell-off on Thursday, when the Sensex plunged 1,045 points, or 1.44%, and the Nifty 50 dropped 371 points, or 1.64%.
For IT stocks, the focus is on two concerns: the potential implications of a US crackdown on the use of foreign workers and signs that demand for technology services remains subdued.
The Trump administration has suspended several major technology and IT outsourcing companies from the US Permanent Labour Certification (PERM) programme, a key step in the employment-based green-card process.
The companies named include Indian IT firms , Infosys, Wipro and HCLTech, alongside Cognizant and Capgemini. US technology companies and Adobe have also been suspended.
US Labour Secretary Keith Sonderling said the Labour Department would neither accept new applications nor process pending permanent labour certification applications involving the companies. The action follows multiple active federal investigations.
The move comes amid a broader push by the US administration to prioritise American workers. Vice-President accused technology companies of abusing the H-1B visa programme, arguing that it was intended to help employers recruit highly skilled foreign workers for roles that could not be filled by American workers.
Attorney General Todd Blanche also said the administration would not tolerate discrimination against American workers.
The administration’s allegations should be distinguished from established findings of wrongdoing. The suspension concerns the permanent labour certification programme; it should not be interpreted as a blanket suspension of all H-1B visas held by the companies.
The figures cited by the US Labour Department underline the scale of the issue being examined by the administration.
According to Sonderling, the companies named had collectively requested nearly 3 million foreign workers since 2009. He said they had received more than 230,000 H-1B visa approvals and over 100,000 permanent labour certifications.
These figures were cited by the US Labour Secretary while explaining the administration’s action. The immediate restriction on the companies relates to new and pending permanent labour certification applications, rather than an announced blanket cancellation of existing work visas.
For Indian IT companies, the development adds uncertainty around their US workforce and immigration processes. The longer-term impact on hiring, project execution and costs will depend on how the investigations proceed and whether the restrictions are expanded or modified.
The immigration-related development comes at a time when investors are already assessing the outlook for IT spending.
TCS reported sequential revenue growth of just 0.5% in constant currency terms in the September quarter, its . The company also indicated that discretionary technology programmes remained under scrutiny, pointing to continued caution among clients.
The subdued growth has raised questions about the pace at which companies are willing to spend on technology services, even as the industry invests in artificial intelligence.
TCS said its annualised AI revenue had reached $3.1 billion, crossing 10% of its revenue. However, the growth in AI-related business has yet to translate into a stronger overall revenue performance, highlighting the uneven nature of demand across technology services.
Investors are also watching how the adoption of generative AI affects traditional IT services. While AI is creating new opportunities for technology companies, it could also change the way clients buy services, allocate technology budgets and negotiate project costs.
A positive GIFT Nifty reading does not necessarily mean that all sectors will rise when domestic trading begins. Stocks can react differently to company-specific developments and sector-level concerns.
The previous session offered a glimpse of this divergence. While the Sensex and Nifty fell sharply on Thursday, the Nifty IT index declined only 0.08%, making it relatively resilient compared with several other sectors.
The performance of IT stocks on Friday will depend on how investors assess the US immigration action, the implications for companies’ workforce arrangements and the outlook for technology spending after TCS’s quarterly results.
Investors will also track broader market sentiment following Thursday’s sell-off. A positive start for the benchmark indices could provide some support, but it may not be enough to offset sector-specific concerns.
For now, the US restrictions and TCS’s muted growth outlook are risks to watch rather than confirmation that IT stocks will fall. The extent of any pressure will become clearer once trading begins and investors respond to the latest developments.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)