TCS, Infosys, Wipro jump up to 5% despite US green-card curbs: Why IT stocks are rising today

Indian IT stocks rebounded on Friday as investors looked past the immediate impact of US green-card curbs. Company clarifications, dip buying and TCS's AI-led quarterly performance lifted sentiment, though broader market risks remain.

In Short

• IT stocks rallied despite US green-card suspensions
• Bargain buying followed Thursday's sharp sell-off
• Sensex and Nifty gained nearly 1% in early trade

IT stocks staged a strong recovery on Friday, October 9, with shares of Tata Consultancy Services (TCS), Infosys, Wipro and other technology companies rising despite concerns over the US government's suspension of several firms from its green-card programme.

The rally comes as investors reassess the immediate impact of the US restrictions, while bargain buying after the previous session's sharp market sell-off is adding to gains. TCS's September-quarter results, particularly its strong growth in artificial intelligence (AI)-related revenue, have also supported sentiment.

At 9:41 am, the BSE Sensex was trading at 72,195.25, up 602.01 points or 0.84%. The Nifty 50 gained 207.70 points, or 0.93%, to 22,439.50 at 9:46 am.

The Nifty IT index rose 3.31% to 28,654.70, making it one of the strongest-performing sectoral indices in early trade.

TCS shares climbed 4.62%, while Infosys gained 3.12%, Wipro rose 3.31% and Tech Mahindra advanced 2.19%. LTM, Persistent Systems and Mphasis also traded higher, with gains of 3.62%, 3.33% and 3.15%, respectively.

WHY ARE IT STOCKS RISING DESPITE THE US GREEN-CARD CURBS?

The US government has suspended several major technology companies, including TCS, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe, from the Permanent Labour Certification (PERM) programme, a key step in the employment-based green-card process.

The move had raised concerns about the potential impact on Indian IT companies with a significant presence in the US. However, clarifications from companies have helped investors assess the immediate implications more closely.

TCS said in a statement to stock exchanges on Friday that it did not expect the suspension to affect its US workforce strategy or customer engagements. The company said its PERM applications had been in single digits over the past two years.

TCS also reiterated its plan to hire an additional 15,000 people in the US over the next five years, saying its workforce strategy was anchored in hiring local talent.

Microsoft, meanwhile, said the majority of its H-1B visa petitions were for current employees, according to a report by The Times of India. This clarification addresses its use of the H-1B programme, although it is distinct from the PERM green-card process.

The distinction matters because the US action concerns permanent labour certification applications and does not amount to a blanket suspension of H-1B visas.

These clarifications may have eased some immediate concerns around workforce planning. However, the longer-term implications will depend on how the restrictions and investigations develop.

BARGAIN BUYING AFTER THURSDAY'S SHARP SELL-OFF

Another key reason behind the rally is bargain buying, also known as buying the dip.

The stock market witnessed a sharp sell-off on Thursday, with the Sensex plunging 1,045 points, or 1.44%, and the Nifty falling 1.64%. The decline pushed the benchmarks to multi-year lows, while several stocks came under pressure.

When share prices fall sharply over a short period, some investors look for opportunities to buy companies they believe have become cheaper relative to their long-term earnings potential. This can lead to a rebound even when the underlying risks have not disappeared.

IT stocks are seeing this kind of buying as investors reassess the impact of the US announcement alongside company-specific developments. The sector's sharp early gains suggest that some market participants are using the recent correction to build positions in beaten-down stocks.

However, bargain buying does not necessarily mean the market has reached a bottom. Some of the recovery could also reflect a technical rebound after the sharp decline, and prices could remain volatile if fresh negative developments emerge.

TCS Q2 RESULTS ADD TO THE POSITIVE SENTIMENT

TCS's September-quarter results, announced on Thursday, have provided another trigger for the sector's recovery.

The company reported a consolidated net profit of Rs 13,884 crore for the second quarter of FY27, up around 15% from Rs 12,075 crore a year earlier. Revenue rose 11.2% year-on-year to Rs 73,188 crore.

A major positive was the performance of its AI business. TCS's annualised AI revenue increased nearly 20% quarter-on-quarter to $3.1 billion from $2.6 billion in the previous quarter, crossing 10% of its overall revenue.

The company also reported total contract value of $9.6 billion for the quarter. International revenue grew 1.2% sequentially in constant currency terms, while banking, financial services and insurance, manufacturing, and technology and services were among the segments contributing to growth.

However, the results were not uniformly strong. TCS's revenue grew just 0.5% sequentially in constant currency terms, highlighting that overall demand remains subdued despite momentum in AI-related business.

The results are therefore providing support to sentiment, but investors will continue to watch whether the growth in AI revenue translates into stronger overall revenue growth in the coming quarters.

CRUDE OIL AND FII SELLING REMAIN RISKS

Despite Friday's recovery, risks to the broader market remain.

Foreign institutional investors (FIIs) have continued to sell Indian equities, while elevated crude oil prices and high US bond yields have weighed on sentiment. These factors can put pressure on the rupee, corporate costs and market valuations.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said high crude prices and US bond yields had shifted the near-term market structure towards a “sell on rally” approach.

He said FIIs had sold equities worth Rs 36,210 crore through exchanges in October so far, adding that foreign investors could continue selling in the near term amid the prevailing headwinds.

Vijayakumar also said the ongoing correction had created opportunities for patient, long-term investors to accumulate high-quality stocks at more favourable valuations.

Crude oil prices eased in early trade on Friday, with Brent falling 1.31% to $102.91 per barrel and US West Texas Intermediate declining 1.14% to $90.45, according to the market data available at the time.

For now, IT stocks are benefiting from a combination of company clarifications, TCS's AI revenue growth and bargain buying after the recent correction. But the sustainability of the rally will depend on whether global risks ease and whether earnings growth improves across the sector.

(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.)

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