IT stocks rally: H-1B fee struck down in 2026

Why IT stocks are back in focus

Indian IT stocks including Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro and Tech Mahindra are back on traders’ radar amid a mix of legal, currency and global tech cues. The immediate trigger is a US Federal court ruling that struck down President Donald Trump’s move to impose a $100,000 fee on new H-1B visas for highly skilled foreign workers. Market participants also weighed a sharp fall in US tech stocks, even as Indian IT counters staged a rebound in recent sessions.

The sector’s price action has been choppy, with risk appetite swinging between AI optimism and concerns about disruptions. Alongside that, the rupee’s slide to fresh lows has supported sentiment for exporters. With Indian IT earning a large share of revenue overseas, currency moves can quickly influence near-term expectations for reported earnings.

US court strikes down proposed $100,000 H-1B fee

A key headline came from the US legal system. US District Judge Leo Sorokin in Boston said the $100,000 fee would be an unlawful tax that Congress had never authorised, according to Reuters. The decision effectively removes an additional cost that would have applied to new H-1B visas.

For Indian IT services companies, visa policy is closely watched because project staffing for US clients often depends on mobility of specialised talent. Any step that raises the cost of visas can become a headwind for delivery economics. Conversely, the court’s decision was viewed as potentially supportive for sentiment around the sector in the trading session.

Nasdaq volatility and risk-off cues from global tech

The positive domestic tone has also had to contend with weak signals from the US. US stocks tumbled on Friday, with the Nasdaq Composite falling over 4%. Separately, commentary in the market linked the roughly 4% Nasdaq crash on June 5 to fears that an “AI bubble may burst.”

These moves matter for Indian IT because global software valuations and client spending expectations often shift with US tech sentiment. When Nasdaq-led tech sells off sharply, Indian IT can see pressure through ADR moves and risk reduction across growth-linked sectors.

A sharp rebound in the Nifty IT index despite broader weakness

Even with global volatility, Indian IT stocks have shown strong bursts of buying interest. On one session highlighted in the provided material, Indian IT “hogged spotlight” with the index rising nearly 5%, bucking weakness in the broader markets. Infosys and TCS led early gains, rising nearly 7%.

More recently, IT stocks extended gains for a third straight session, led by Infosys, TCS, HCL Technologies and Tech Mahindra. The rally was linked to stronger global tech sentiment, AI spending optimism, hopes of rate cuts and support from a weaker rupee. In another early trade snapshot, Infosys, HCL Tech, TCS and Tech Mahindra were the only gainers on the Sensex, up to 1.35% in early deals.

Rupee at record lows and why it matters for IT exporters

Currency was a central part of the sector narrative. The rupee fell to a fresh record low and later fell further to 96.30 amid a stronger dollar and high crude oil prices. Analysts pointed out that Indian IT earns nearly 80%-85% of its revenue from overseas operations.

A weaker rupee tends to support sentiment because revenue is largely billed in foreign currencies while reporting is in rupees. As the rupee depreciates, the same dollar revenue converts into higher rupee revenue, all else equal. This currency tailwind was cited alongside bargain hunting, after what was described as a “huge correction” in IT stocks linked to AI concerns.

What’s driving the bounce: rotation, SaaS earnings, valuations

A market commentary in the provided text described two drivers for the up move. First was “global rotation,” with money moving back into software names worldwide compared with the “Mac 7.” Strong results from several SaaS companies, including guidance upgrades, were seen as easing fears of a “SaaS apocalypse” or business model breakdown.

Second was INR weakness, described as a direct earnings tailwind for many IT exporters. The same commentary also argued that valuations had been “beaten down hard,” with IT described as among the cheapest seen in many years. Over the last two sessions referenced, stocks rallied between 4% and 7%.

The same snapshot quantified parts of the rebound: TCS was up about 7.5%, Infosys about 15%, HCL Tech about 10%, Wipro about 11%, and Tech Mahindra about 20% from the referenced point.

Earnings season context: uneven performance and deal cycles

Brokerage commentary also flagged that the Q4FY26 earnings season underscored uneven performance among large players like Infosys, TCS and HCL Technologies, according to Motilal Oswal. While deal pipelines were described as robust across the sector, visibility on growth was said to be increasingly uncertain.

HCL Tech’s Q4FY26 numbers were cited as an example of mixed trends: net profit rose 4.2% year-on-year to ₹4,488 crore, while revenue climbed 12.35% YoY to ₹33,981 crore. However, sequentially, revenue was “largely flat” and margins contracted, pointing to near-term operational pressure.

Choice’s sector view added more colour on quarterly performance: it said TCS and Tech Mahindra were relatively more resilient, posting 1.2% and 0.6% quarter-on-quarter growth respectively. By contrast, Infosys declined 1.3% and HCL Technologies fell 3.3% on a QoQ basis, with reasons cited as seasonal softness, telecom spending cuts and deal deferrals. It also said TCS led with strong mega-deal wins, while Infosys and HCLTech saw moderation due to elongated decision cycles and delayed ramp-ups.

Stock-specific trigger: Infosys-Anthropic AI collaboration

One session described a clear stock-specific catalyst. Shares of Infosys, HCLTech, Wipro, Tech Mahindra and TCS moved sharply higher during intraday trade on February 17, lifting the Nifty IT index by nearly 3% in a single session.

The trigger, as described, was Infosys announcing a strategic collaboration with Anthropic to build and deploy advanced AI solutions for enterprise clients. The development was framed as shifting the AI narrative from threat-focused to opportunity-focused, helping lift sector mood after weeks of AI-related worries.

Conflicting cross-currents: ADR falls and AI disruption headlines

Not all signals were supportive. Another update noted IT stocks were in focus after American depositary receipts (ADRs) of Indian IT companies fell overnight amid broader Wall Street selloff and “fresh AI disruptions by Anthropic.” This highlights the push-and-pull for the sector: AI can be a demand catalyst, but also a disruption risk that affects how investors value traditional services models.

In domestic trade as well, IT stocks were described as in focus on a Tuesday morning after a broader Wall Street selloff. These cross-currents can contribute to short, sharp sector rotations.

Key numbers and events at a glance

Brokerage calls and target prices cited

Choice also provided a list of preferences and ratings. Within Tier-1, it preferred Infosys and Tech Mahindra. Among mid-caps, it preferred Persistent Systems, and said Coforge had stronger growth visibility backed by deal momentum.

Market impact: what investors are watching now

The immediate market impact is visible in price momentum and sector leadership in recent sessions. Several drivers are acting simultaneously: the H-1B fee ruling improved the tone around staffing cost risks, while the rupee’s weakness supported exporters’ near-term earnings optics. Global rotation back into software and strong SaaS earnings also helped sentiment, according to the provided commentary.

At the same time, the sector remains sensitive to US tech drawdowns, as seen in the Nasdaq drop and ADR weakness. Investors are also watching whether AI-related headlines support demand through new projects or compress pricing through automation and disruption. Earnings commentary around decision cycle elongation, deal ramp-up delays, and pockets of vertical stress such as telecom spending cuts adds to the near-term uncertainty.

Conclusion

Indian IT stocks are being pulled by multiple, fast-moving inputs: a US court ruling on an H-1B fee, currency moves, global tech risk appetite, and AI-driven narratives. Recent sessions show the sector can outperform sharply when sentiment turns, even as earnings and deal-cycle commentary points to an uneven operating backdrop. The next directional cues are likely to come from global tech moves, further currency action, and follow-through on deal wins and AI-led enterprise engagements already referenced by the companies and brokerages.