Why Indian IT stocks lost ₹55,000cr in today's session
What's the story
Indian IT stocks witnessed a massive loss of nearly ₹55,000 crore in market capitalization on Wednesday. The fall was led by Infosys and Coforge, which saw a decline of about 6% each. Other major players such as Tech Mahindra, HCL Technologies and Persistent Systems also witnessed a drop. TCS, Mphasis, Wipro and LTIMindtree saw their shares fall by up to 2.5%.
Suspension details
US Labor Department suspends Cognizant's PERM filings
The market downturn was triggered by the US Department of Labor's decision to suspend Cognizant's Permanent Labor Certification (PERM) filings.
The move is a major hurdle for employers hoping to sponsor foreign workers for employment-based green cards.
Anthony D'Esposito, Inspector General at the US Department of Labor, announced the suspension while federal authorities investigate alleged fraud and potential harm to American workers.
Warning issued
'Threats to American workers will not be tolerated'
D'Esposito warned that "Threats to American workers will NOT be tolerated."
He said, "Alongside @WHFraudTF, we're following facts, fraud and finances. Handcuffs await."
The investigation is being carried out in coordination with Labor Department officials and the White House anti-fraud task force.
However, specific allegations against Cognizant or Cloudera remain undisclosed as does the number of applications affected by this suspension.
Expansion plans
Cognizant just announced plans to expand its US workforce
The action comes just a day after Cognizant announced its plans to expand its US workforce.
The company said it would hire 1,500 US college graduates and grow its Frontier Certified Engineer and Frontier Business Operator teams to 15,000 people.
"We are hiring American graduates, standing up new American job categories for the AI era," said Cognizant's CEO Ravi Kumar S.
Coforge concerns
Coforge chairman resigns after internal audit raises concerns
Coforge, another leading Indian IT services provider, also witnessed a major fall in its shares today after the resignation of its chairman, Om Prakash Bhatt.
The decision comes after an internal audit flagged concerns over the company's board evaluation process. Bhatt was appointed as the chairman of Coforge's board in 2024 and was set to serve until April 2027.
The company's shares fell over 6% to around ₹1,829 on the NSE in today's session.
Factors
Other reasons behind today's sell-off in IT stocks
Today's IT rout reflected broad sector pain as the Nifty IT dropped nearly 3%.
Apart from Brent crude prices at around $100 and revived Fed rate worries, the heaviest blow came from expanded US visa fees taking effect today.
Levying $4,000 per H-1B extension and $4,500 on L-1s creates recurring overhead, directly hitting margins for an already battered sector down 24% this year.