Indian IT stocks defied concerns over the latest US visa curbs to rally up to 6% in Friday's morning trade, with the Nifty IT index surging 3.3% to 28,776.75 as all index constituents traded in the green. TCS emerged as the top gainer with a 5.4% rise, followed by Wipro gaining nearly 3% to hit a day's high of ₹163, while HCLTech and Tech Mahindra shares gained 3% each. Coforge and Persistent Systems rallied 3% and 4% respectively, with the sector adding ₹70,000 crore in market capitalisation despite the US suspending IT firms from the Permanent Labour Certification Programme. The rally came despite the US Department of Labor stopping acceptance of new applications from Cognizant, Infosys, Capgemini, Wipro, TCS and HCLTech, with Labor Secretary Keith Sonderling noting these companies had sought nearly three million foreign workers since 2009, securing more than 230,000 H-1B visa approvals and over 100,000 permanent labor certifications.
TCS delivered strong Q2FY27 results with consolidated net profit rising 14.9% year-on-year to ₹13,884 crore from ₹12,075 crore in the year-ago quarter, while revenue from operations increased 11.2% to ₹73,188 crore. In constant currency terms, revenue rose 0.5% quarter-on-quarter. The IT major became the first major Indian IT company to report Q2 FY27 results, giving investors an early indication of the sector's demand environment. Operating margin came in at 24%, while net margin stood at 19%. The board has declared a second interim dividend of ₹12 per share for the financial year 2026-27. CEO and MD K Krithivasan said the company saw broad-based growth across international markets and most industry segments. He highlighted that the Porsche and Best Buy deals represent a new category of transformation partnerships and that TCS is building repeatable platforms with clients to industrialise AI at scale. With the total contract value (TCV) surging to $9.6 million, the company's overall AI revenues were at $3.1 billion in the second quarter, crossing 10% of the overall revenues in the period. AI-related revenue jumped nearly 20% quarter-on-quarter to $3.1 billion from $2.6 billion in the July-September quarter. Nomura maintained its Buy rating on TCS with a price target of ₹2,630, implying an upside of 27%, noting that the company's trailing 12-month deal wins remained flat YoY while near-term demand conditions were largely unchanged.
While the immediate impact was seen through higher hiring and compliance costs for the affected IT companies, data shows that Indian IT companies have significantly reduced their H-1B visa hiring amid higher costs. According to services industry body NASSCOM, the number of H-1B employees from Indian companies have come down substantially over the last decade, with FY27 numbers at least a seven-year low. The number of properly submitted, or eligible registrations, tanked 38.5% to 211,600 for FY27, from 343,981 a year earlier, as per the US Citizens and Immigration Services (USCIS). TCS, in an official statement, said that PERM applications were in single digits over the last two years, and that it does not expect the suspension to impact its workforce strategy or customer engagements. Market experts noted that "Visa hiring has already tightened significantly. This development is unlikely to create any substantial additional pressure on the sector. It is more a formalisation of an existing trend than a fresh negative impact," said G Chokkalingam, founder, Equinomics Research. Indian IT firms accounted for less than 2% of the PERM applications filed between October 2024 and September 2025, according to ICICI Securities, with analysts noting that prolonged uncertainty around residency could increase attrition among US-based workers. Indians reportedly account for 71% of H-1B visa beneficiaries in the US, with Amazon recording 9,337 H-1B visas, followed by TCS with 4,450, Infosys and Apple at 4,113 and 3,879 respectively. HCLTech expects little workforce impact from the US suspension, citing its limited recent use of the programme and increased recruitment of local talent. The company's human resource head Ram Sundarajan said during the Q2 FY27 earnings report that "We will comply with the directive from the Department of Labor and respond to any questions they may have. Over the last many years, we have ramped up our in-country recruiting efforts to build a significant local talent base," adding that this would be the company's approach going forward.
The rally also comes after a difficult period for technology stocks, with the Nifty IT index down about 26% for the year amid concerns over AI disruption, weak discretionary technology spending and uncertainty around US immigration policies. That steep correction has left investors more willing to respond to positive developments, with TCS's results, particularly the stable margin and strong AI revenue, providing the sector with a reason to recover. The broader market also bounced back after Thursday's heavy sell-off, with the Nifty 50 and Sensex both higher in Friday's morning trade, adding to the positive tone across sectors. The focus now shifts to the upcoming results from other major IT companies, with their revenue growth, deal wins, margins and commentary on AI spending expected to determine whether Friday's move develops into a broader sector recovery or remains a relief rally. Aamar Deo Singh from Angel One noted that "TCS delivered strong results, with double-digit growth in both revenue and profits, signalling that the worst may be behind the IT sector and demand could be recovering."
