Core Viewpoint - The imposition of a $100,000 fee on new H-1B applications by the US is expected to significantly impact Indian IT companies, leading to increased operating costs and a decline in stock performance within the sector [1][5]. Group 1: Market Performance - Information technology stocks were the worst performers on Monday, with the Nifty IT index dropping 3 percent and experiencing over $10 billion in market capitalisation erosion [1]. - The NiftyIT index has seen losses ranging from 1.7 to 4.7 percent, with mid-size companies like Persistent Systems, Coforge, LTIMindtree, and Mphasis falling between 4.3 to 4.7 percent [2]. - Over the past week, the NiftyIT index has declined by over 1000 points, attributed to slower deal-making in the US and pricing pressures [2]. Group 2: Revenue Impact - Despite a reduced dependency on H-1B visas, the US still represents nearly 60 percent of revenues for Indian IT companies, indicating a potential near-term negative impact on stock prices due to protectionist risks [3]. - Approximately 71 percent of H-1B visa beneficiaries are Indians, highlighting the significance of this visa category for the Indian IT sector [3]. Group 3: Cost Implications - The new H-1B visa fee will increase operating costs for Indian IT services companies, compounded by a potential 25 percent tax under the proposed HIRE Act for US companies outsourcing to foreign entities [5]. - The top 12 IT companies are expected to see an impact on their earnings ranging from 1.5 to 12 percent due to the new visa costs, affecting them by 14 to 188 basis points [6]. Group 4: Industry Outlook - InCred equities downgraded the IT sector's rating to Neutral from Overweight, citing new regulations as a factor contributing to macroeconomic uncertainty [7]. - Key challenges for FY27 revenues and EBIT margins include rising cost pressures, a decrease in onsite roles, and potential offshoring of existing onsite roles [7].