Nifty IT Falls 1.47% as H-1B Fee Hike and Nvidia Watch Rattle India’s Tech Giants

MUMBAI — On the day that sent India’s private banks sharply higher, the technology sector moved in the other direction. Nifty IT fell 1.47% Thursday in a session where the broader Nifty 50 lost 0.52% and banking stocks were reading Federal Reserve rate cuts as an unqualified benefit. For Indian software exporters, the same macro development carries a different arithmetic.

The divergence between the two most-traded sectoral indices in India — private banking up more than 1%, IT down nearly 1.5% on the same session — captured a structural divide that has been widening through 2026. Indian technology companies generate most of their revenue in U.S. dollars. A weaker dollar, which rate cuts from the Fed tend to produce, erodes the rupee value of that revenue without any change in the underlying business. Indian private banks, by contrast, earn almost entirely in rupees and benefit directly when the RBI gains room to ease domestic rates.

Two catalysts sharpened Thursday’s pressure beyond the structural dollar headwind. First, Nvidia’s quarterly results were due after Indian market hours. Nvidia’s guidance functions as one of the most direct indicators of whether U.S. enterprise technology spending is accelerating or pausing, and Indian IT stocks — whose management teams have spent the year trying to align their AI service offerings with the infrastructure buildout Nvidia supplies — move with that signal. An Nvidia miss would tighten the market’s view of how much incremental AI work Indian IT firms can capture. A beat would provide a floor.

Second, a proposal circulating in Washington to raise H-1B visa application fees to $103,265 per new application was keeping cost pressure in view. Indian IT companies place tens of thousands of engineers at U.S. client sites annually on H-1B visas. A fee structure at that level would materially raise the cost of onsite delivery, particularly for mid-sized firms without the scale of TCS or Infosys. The largest players can absorb fee increases that compress smaller competitors — one reason the market has been sorting within the sector between names with global delivery diversification and those still concentrated in U.S. onsite presence.

The rupee translation effect is the more immediate mechanical pressure. The rupee has held at 95.40 against the dollar through August, supported by FPI inflows and a narrowing current account deficit. But the trajectory of Fed cuts now priced into futures — at least 75 basis points before year-end — implies steady dollar depreciation that would reduce the rupee value of every dollar earned by Indian exporters. The table below illustrates the translation impact at a hypothetical 88.00 exchange rate.

These are analytical estimates based on FY27 revenue guidance ranges; actual results depend on each company’s hedging policies and the actual rupee trajectory. All four carry significant forward dollar hedges that soften but do not eliminate the translation impact as those books roll off.

Analysts at Kotak Institutional Equities and Emkay Global trimmed their FY27 earnings estimates for Infosys and TCS through August, citing rupee appreciation risk alongside slower-than-expected deal ramp-up timelines in AI services. Both brokerages revised their Nifty IT year-end targets lower in August research notes, though they stopped short of outright sell ratings on valuation grounds, noting the sector’s historical tendency to recover sharply once U.S. discretionary spending turns.

Foreign portfolio investors have been selling Indian IT stocks for three consecutive months on provisional exchange data, even as they remained net buyers across the broader market. The 29% year-to-date decline in the Nifty IT index has compressed valuations for TCS and Infosys to levels last seen in 2020. Nikkei Asia’s analysis of India’s rate environment notes that export-facing industries face a fundamentally different outlook from domestic demand plays as the Fed easing cycle begins.

Thursday’s session told a story about what rate cuts actually mean for different corners of India’s economy. Banks live in rupees; a weakening dollar is largely irrelevant to their margin structure. IT companies live in the gap between their dollar revenues and their rupee costs — a gap that narrows when the dollar falls and hedged positions roll off. On the same afternoon, Powell’s Jackson Hole message was simultaneously a buy signal for one sector and a sell signal for the other.

The recovery case for Nifty IT requires U.S. corporations to resume discretionary technology spending budgets they compressed since 2024. Rate cuts signalling a genuine soft landing could eventually unlock that spending, but the transmission from central bank action to enterprise technology procurement runs through boardroom budget cycles that operate on annual timelines, not quarterly ones. The Nifty 50 holds technical support at 24,400, but no comparable floor has emerged for the technology sub-index. The next guidance cycle, driven by September quarter results in October, will provide the clearest read on whether the bottom in IT spending is approaching. Thursday’s session offered no confirmation either way.

Economy Desk

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