About 23 per cent of new petitions seeking H-1B visas for the US were denied in fiscal year 2019.
Mumbai: Reports of changes in US work visa requirements aimed at protecting American workers led to a sharp fall in frontline IT stocks. The BSE IT index fell 2.21 per cent, The Deccan Chronicle reports.
The top losers on the BSE were Infosys (-2.89 per cent) and TCS (-2.20 per cent). Other frontline losers included Wipro (-1.78 per cent), HCL Tech (-1.82 per cent) and Tech Mahindra (-1.35 per cent).
Among the tier-two IT companies, Mphasis (-3.59 per cent), Hexaware (-1.81 per cent), Cyient (-1.59 per cent) and Tata Elxsi (-1.30 per cent) also saw declines in their share price.
About 23 per cent of new petitions seeking H-1B visas for the US were denied in fiscal year 2019, according to the external affairs ministry.
The H-1B visa in the US allows employers to temporarily employ foreign workers in specialty occupations.
The duration of stay is three years, extendable to six years, after which the visa holder may need to reapply.
According to reports, the White House Office of Management and Budget is proposing to revise the definition of “specialty occupation” to increase focus on obtaining the best and brightest foreign nationals via the H-1B program, and may see the introduction of additional requirements to ensure employers pay appropriate wages to H-1B visa holders.
The sharp fall in the IT stocks also comes at a time when, the sector’s outlook has changed since reporting its second quarter performance.
After in-line results for the IT sector during July-September quarter, the outlook for some of the key verticals in this sector like BFSI, retail and manufacturing appeared weak, according to analysts.
“September 2019 quarter results for our coverage companies were broadly in line with expectations.
Growth in the financial services vertical moderated, with companies reiterating near-term uncertainty due to slow decision-making at European banking clients and capital markets clients in the US,” said Manik Taneja and Devanshu Bansal, analyst, Emkay Global Financial Services.
“The commentary on BFSI, specifically for capital-market clients in the US and large banking clients in Europe, remained weak. The volatility in Retail and Manufacturing verticals is expected to continue in the near term. These three verticals form about 50- 60 per cent of sales for IT services sector,” analysts from Emkay Global said.