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TCS earnings, lower H-1B hiring and rupee depreciation help lift sentiment despite fresh US restrictions
Indian information technology (IT) stocks rallied on Friday, with the Nifty IT index gaining around 3 per cent in intraday trade, as strong quarterly results from Tata Consultancy Services (TCS), reduced dependence on H-1B visa hiring and currency depreciation helped investors look past fresh US immigration-related restrictions.
All 10 constituents of the Nifty IT index traded higher during the session. TCS led the gains after reporting better-than-expected results for the September quarter, while Mphasis, Coforge, LTIMindtree and Persistent Systems also posted strong advances.
The rally came a day after the US government suspended several technology companies, including TCS, Infosys, Wipro, HCL Technologies, Cognizant, Capgemini, Microsoft and Adobe, from the Permanent Labour Certification Programme (PERM).
The action has raised concerns about potential hiring and compliance costs for affected companies. However, investors appeared to focus on the limited immediate exposure to the programme and the earnings outlook for the sector.
TCS earnings lift investor sentiment
TCS emerged as the leading gainer among major IT stocks after reporting a 14.9 per cent year-on-year increase in net profit to Rs 13,884 crore in the second quarter of FY27, from Rs 12,075 crore a year earlier.
Revenue rose 11.2 per cent year-on-year to Rs 73,188 crore, providing some support to sentiment around the sector amid uncertainty over global technology spending and the disruption caused by artificial intelligence.
More from BusinessTCS shares gained around 4.6 per cent in intraday trade, while other IT stocks advanced as investors assessed whether the company’s performance could signal resilience across the industry.
The results also helped shift attention towards deal activity, revenue growth and profitability, rather than focusing solely on the latest US immigration-related development.
Indian IT firms have reduced H-1B dependence
A key factor limiting concerns is the industry’s reduced reliance on H-1B visa hiring compared with previous years.
According to data cited by industry body Nasscom, H-1B registrations linked to Indian IT companies have declined significantly over the past decade. Eligible H-1B registrations fell 38.5 per cent to 211,600 for FY27, from 343,981 a year earlier, according to US Citizenship and Immigration Services data released in May.
G Chokkalingam, founder of Equinomics Research, said visa hiring had already tightened significantly, suggesting the latest development might not add substantial pressure beyond existing constraints.
He described the move as more of a formalisation of an existing trend than a fresh negative shock for the sector.
TCS also said its PERM applications had been in single digits over the past two years and that it did not expect the suspension to affect its workforce strategy or customer engagements.
Rupee depreciation offers some support
The rupee’s depreciation has also provided a measure of support to IT companies, which earn a substantial share of their revenue from overseas markets.
When foreign-currency earnings are converted into rupees, a weaker domestic currency can lift reported revenue and support profitability, although the actual benefit depends on hedging arrangements, costs and the currency composition of each company’s business.
Chokkalingam said the rupee’s weakness appeared to have improved profitability in rupee terms, offering some comfort to a sector that has faced pressure from concerns over growth and margins.
