On April 22, 2020 US President Donald Trump issued a Presidential proclamation, which suspended the entry of most new immigrants, as a result of the Covid-19 crisis with few exceptions for some guest workers.
These immigrants constituted largely of immigrants going to the US on work visas, like H-1Bs and H-2Bs, among others.
It has been reported that the shares of most IT players, like Infosys, TCS, HCL Tech, Tech Mahindra and Wipro have been registering heavy share price losses, as marked on June 12.
This is attributed to the fact that President Donald Trump could suspend a number of employment visas, including the H-1B.
American Decisions and Movements Affect Indian IT Players
The coronavirus pandemic has caused a huge pool of unemployment in the United States. The Trump govt is now preparing to unfold another set of restrictions on legal immigration, in views to recover its economy.
The Trump administration believes that the entry of foreign nationals into the U.S., lead to lesser job opportunities to native born Americans.By temporarily suspending all the non-immigrant visas like the H-1B, on which Indian IT professionals rely heavily on, the Indian IT giants are registering heavy losses in the share markets.
This is the main reason they are devising reforms that hardline immigration and allow only essential workers like medical help and others into the country, during times of economic recovery.
By temporarily suspending all the non-immigrant visas like the H-1B, on which Indian IT professionals rely heavily on, the Indian IT giants are registering heavy losses in the share markets.
Shares of Indian IT Giants Fall
H-1B visa is among the most coveted foreign work visas for technology professionals in India.
According to the share market reports from June 12, the following results were found:
- Tech Mahindra shares fell by 2.91%,
- Shares of Wipro fell by 2.26%,
- Infosys saw a share decline of 1.63%,
- Followed by TCS, slipping shares at 1.41%, and
- Wipro showing a decline in shares by 1.10%.
Is there a Chance for Improvement?
According to Edelweiss Securities, COVID-19 will lead to a substantial jump in global technology spends, which would mean higher revenue growth for Indian IT companies, along with cost optimization.
The financial intermediary says that with considerable cash generation capability, robust distribution policy and higher ranking of most tech companies on ESG parameters, the funds’ interest will give better results and help them drive their revenue.
This will trigger multiple growth opportunities, coupled with a significant upgrade in earnings over the next year.
This buys them enough time to revise their earnings, multiples and target prices across the spectrum and estimate 20-56% returns in the base-case scenario with a near-term downside risk of 10%.