Indian Tech Stocks Decline Nearly 3% on New U.S. Visa Fee
Indian technology shares experienced a sharp decline on Monday, dropping nearly 3% after U.S. President Donald Trump announced a $100,000 fee on new H-1B visas reserved for high-skilled foreign workers. Indian nationals account for approximately 71% of the nearly 400,000 H-1B visas issued in 2024. Nine of the ten Indian IT companies listed on the Nifty IT sub-index traded lower. Mphasis led the losses with a drop exceeding 4%, followed by Persistent Systems down 3.8% and LTIMindtree declining 3.79%.
“The new fees could drive Indian companies to offshore more employees currently based in the U.S., which would reduce headline revenue since offshoring is a high-margin but low-revenue activity,” said Manishi Raychaudhuri, CEO of Emmer Capital Partners.
Raychaudhuri further estimated an immediate earnings impact of 2% to 4% for these companies, a sentiment reflected in current stock price movements. India’s broader indices showed mild weakness, with the Nifty 50 slipping 0.12% and the Sensex down 0.48%.
Adani Power Shares Surge Post Stock Split
Adani Power shares soared over 15% following the implementation of a five-for-one stock split. The thermal power company converted each share with a face value of 10 Indian rupees (approximately $0.11) into five shares valued at two rupees each, a move approved by shareholders earlier this month. Stock splits typically enhance accessibility for investors and improve liquidity in the market.
China Holds Loan Prime Rates Steady Amid Global Rate Cuts
The Chinese central bank maintained its loan prime rates (LPR) unchanged for the fourth consecutive month, aligning with market expectations. The one-year LPR remains at 3.0%, and the five-year LPR is steady at 3.5%, according to a Monday statement. The one-year rate influences most new and existing loans, while the five-year rate affects mortgage pricing. This decision follows the U.S. Federal Reserve’s recent 25 basis point rate cut. China’s CSI 300 index rose 0.46% in response to the rate decision.
Hong Kong’s Hang Seng Index declined 0.76% to close at 26,344.14, while the Hang Seng Tech Index fell 0.58% to 6,257.91. In contrast, Japan’s Nikkei 225 rose 0.99% to 45,493.66, and the Topix index increased 0.49% to 3,163.17. The 10-year Japanese Government Bonds climbed to 1.650%, the highest yield since July 2007. South Korea’s Kospi gained 0.68%, closing at 3,468.65, while the smaller-cap Kosdaq surged 1.3% to 874.36. Samsung Electronics shares jumped over 4% following reports that Nvidia approved the company’s fifth-generation high-bandwidth memory product after nearly 18 months of development and testing. Australia’s ASX/S&P 200 index also advanced 0.43%, closing at 8,810.9.
U.S. Markets Near Record Highs Amid Fed Rate Cut Optimism
U.S. equity futures showed little change during Asian trading hours after a strong week for major indices. The Dow Jones Industrial Average and S&P 500 closed at fresh all-time highs last week, buoyed by the Federal Reserve’s recent rate reduction. Markets currently anticipate two additional quarter-point rate cuts by year-end, according to the CME FedWatch Tool. On Friday, the Dow gained 172.85 points (0.37%) to 46,315.27, the S&P 500 rose 0.49% to 6,664.36, and the Nasdaq Composite increased 0.72% to 22,631.48.
FinOracleAI — Market View
The imposition of a $100,000 fee on new H-1B visas is a significant policy shift that will likely pressure Indian IT firms’ U.S. operations and earnings in the near term. The move encourages offshoring, which reduces revenue despite higher margins, impacting stock valuations negatively.
- Opportunities: Increased offshoring could accelerate digital transformation initiatives in India, potentially unlocking new service models.
- Risks: Revenue erosion from U.S. markets, potential client contract renegotiations, and overall investor sentiment deterioration.
- Stability in China’s LPR suggests cautious monetary policy amid global rate cuts, supporting modest equity gains.
- Strong corporate developments in South Korea and Japan may provide regional market resilience.
- U.S. Fed rate cut optimism continues to buoy global equities, though geopolitical and policy uncertainties remain.
Impact: Negative for Indian tech stocks due to increased visa costs and operational challenges; neutral to mildly positive for broader Asia-Pacific markets amid steady monetary policies and selective corporate gains. U.S. equity futures showed little change during Asian trading hours after a strong week for major indices. The Dow Jones Industrial Average and S&P 500 closed at fresh all-time highs last week, buoyed by the Federal Reserve’s recent rate reduction. Markets currently anticipate two additional quarter-point rate cuts by year-end, according to the CME FedWatch Tool. On Friday, the Dow gained 172.85 points (0.37%) to 46,315.27, the S&P 500 rose 0.49% to 6,664.36, and the Nasdaq Composite increased 0.72% to 22,631.48.
FinOracleAI — Market View
The imposition of a $100,000 fee on new H-1B visas is a significant policy shift that will likely pressure Indian IT firms’ U.S. operations and earnings in the near term. The move encourages offshoring, which reduces revenue despite higher margins, impacting stock valuations negatively.
- Opportunities: Increased offshoring could accelerate digital transformation initiatives in India, potentially unlocking new service models.
- Risks: Revenue erosion from U.S. markets, potential client contract renegotiations, and overall investor sentiment deterioration.
- Stability in China’s LPR suggests cautious monetary policy amid global rate cuts, supporting modest equity gains.
- Strong corporate developments in South Korea and Japan may provide regional market resilience.
- U.S. Fed rate cut optimism continues to buoy global equities, though geopolitical and policy uncertainties remain.
Impact: Negative for Indian tech stocks due to increased visa costs and operational challenges; neutral to mildly positive for broader Asia-Pacific markets amid steady monetary policies and selective corporate gains.
