Shares of information technology companies such as HCL Technologies, Infosys, Wipro, TCS, Tech Mahindra, Mindtree, Persistent Systems and Mphasis came under heavy selling pressure today after a bill backing key changes in the H-1B programme was reintroduced in the US.
- The IT sub-index on the BSE slumped nearly 3 per cent
- Fall wiped out over Rs 21,000 crore in market value of top 4 firms
- HCL Tech, Infosys, TCS, Wipro and Tech Mahindra fell up to 4.5%
The IT sub-index on the BSE slumped 2.5 per cent with shares like HCL Technologies falling 3.5 per cent, Infosys declining 2.5 per cent, TCS slipping 2 per cent and Wipro sliding 2 per cent.
Today's fall wiped out over Rs 22,000 crore in market value of top four Indian outsourcers: TCS, Infosys, Wipro and HCL Tech.
The bill which allows skilled workers from countries like India to fill high tech jobs in the US, has been reintroduced in the US Congress by two lawmakers who claim that that it will help crack down on the work visa abuse.
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The bill, among other things, proposes to increase the minimum salary of H-1B visa holders to $100,000 per annum (from around $60,000 currently) and eliminate the Master's Degree exemption.
Meanwhile, analysts say that if the bill is passed in the US, the operating margins of Indian outsourcers will be hurt.
AK Prabhakar, head of research at IDBI Capital Markets & Securities, says "H-1B visa is main reason for fall in IT shares. If the bill is passed, then it will have an impact 150 basis points on the EBITDA margins of IT companies."
"A few Indian IT companies, like Persistent Systems, which already have 50-55 per cent of local people employed in the US will be impacted to a lesser extent," adds Mr Prabhakar.
He added that along with development on H-1B visa issue, selling pressure is also because some big investors are exiting their positions ahead of third quarter earnings.