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Informist, Monday, Sept. 22, 2025

 

By Akash Mandal

 

MUMBAI – Shares of information technology giant Tata Consultancy Services are likely to test INR 2,900-INR 2,800 lower levels this month amid a series of pressures on the sector, the latest of which includes the hefty $100,000 one-time fee on new H-1B visa applications. Traders bought out-of-the-money put contracts of TCS, indicating a cautious mood in the near term.

 

The stock, along with its other industry peers, fell sharply Monday and was among the worst-hit Nifty 50 constituents and closed 3% lower at INR 3,073.80 Monday on the National Stock Exchange. "TCS may fall to INR 2,900 levels near term, but fall will be not be sharp...it will take support around INR 2,800," a derivatives analyst at a domestic brokerage said. 

 

TCS is among the top global IT players which have a chunk of their employees working under the H-1B visa in the US and the new fee could put pressure on the company's margins. Some analysts called the reaction "knee-jerk", with most brokerages saying the move is unlikely to cause severe damage for the industry in the longer run, though the sector will come across a few speed bumps in the near term. 

 

The highest open interest addition on the put side was at INR 3,060-INR 2,940 strikes expiring Sept. 30 and premiums on these contracts were up 150-355%. The maximum concentration of open interest was at INR 3,000-INR 3,040 put strikes and premiums on these contracts, too, were up manifold, indicating the near-term downside for the stock. 

 

Traders added short positions on the call options side. The highest open interest addition was seen at INR 3,080-INR 3,140 strikes, implying that near-term gains are likely to be capped. The highest open interest concentration was at the INR 3,200 strike. 

 

Indian IT stocks had rallied in early September after US President Donald Trump said the US is in trade talks with India, which had raised hopes of some relief on the tariff front. In the last two weeks, the Nifty IT had risen nearly 7% and the top five stocks in the sector – TCS, Infosys, HCL Technologies, Wipro, and Tech Mahindra – gained 5-7%. However, these gains were based on hopes of ease in worries about tariffs and rate cut hopes from the US Federal Reserve. 

 

There are different views about the possible impact of the new visa policy on the sector, with some expecting the sector to see a major hit in the near term, while another section believing the sector to see only minimal impact. Indian IT firms are likely to see an impact of around 50-150 basis points on their margins if they choose to continue to use their current workforce dependent on H-1B visas, Nuvama Institutional Equities said in its report. The brokerage said these IT companies will now focus on only critical jobs when mulling whether to hire based on the H-1B visa. 

 

Jefferies expects 7-12% of IT business to be renegotiated over the next 3-5 years. It also expects Indian IT companies to change their operating model. Morgan Stanley sees minimal impact in the near term, but said the policy could lead to higher cost structure in the medium term. 

 

Dragged down by losses in IT stocks, the Nifty 50 closed 0.5% lower at 25202.35 points, ending just above the crucial support of 25200 points. Traders sold many out-the-money call strikes and bought put options on expectations of a further fall. The highest open interest addition was at the 25200-25300 strikes and the highest concentration was at the 25300-25500 strikes.  

 

--Nifty 50 September closed at 25276.00, down 135.20 points; 73.65-point premium to the spot index

--Nifty 50 October closed at 25408.80, down 125.70 points; 206.45-point premium to the spot index

--Nifty 50 November closed at 25535.00, down 115.30 points; 332.65-point premium to the spot index

 

Adani Green Energy, RBL Bank, Infosys, Adani Enterprises, Reliance Industries, ICICI Bank, Tata Consultancy Services, HDFC Bank, Vedanta, Eternal, State Bank of India, Adani Energy Solutions, Adani Ports and Special Economic Zone, Bharti Airtel, and Tata Motors were the most active underlying stocks Monday.  End

 

Edited by Deepshikha Bhardwaj

 

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