The Indian stock markets began the week on a turbulent note as benchmark indices fell sharply on 22 September 2025, weighed down by steep losses in the information technology (IT) sector. A surprise decision by the United States to hike fees for H-1B visas sent shockwaves across the sector, dragging down shares of companies like Infosys (NSE: INFY), TCS (NSE: TCS), Tech Mahindra (NSE: TECHM), and Wipro (NSE: WIPRO) by as much as 6%.
The ripple effect of the move was felt across Dalal Street. The Sensex slipped more than 150 points during intraday trading, while the Nifty breached the 25,300 level, marking one of the sharpest declines in recent weeks. The rupee too felt the heat, weakening against the U.S. dollar amid rising concerns over the future earnings of Indian IT companies heavily dependent on American contracts.
The Trigger: Trump Administration’s H-1B Visa Fee Hike
The immediate trigger for Monday’s selloff came from Washington, where President Donald Trump’s administration announced a steep increase in the fees for H-1B visas—non-immigrant visas that allow U.S. companies to employ foreign workers in speciality occupations, particularly in IT and engineering.
Indian IT firms are among the largest users of this visa program, sending thousands of software professionals to the U.S. every year to serve American clients. The fee hike significantly raises the cost burden on these companies, potentially denting margins at a time when global IT demand is already under pressure.
Industry analysts estimate that the cumulative cost increase could run into hundreds of millions of dollars annually for the Indian IT sector.
How the Stock Market Reacted
The market reaction was immediate and severe.
- Infosys plunged by nearly 5.8%, wiping out thousands of crores in market capitalization.
- Tata Consultancy Services (TCS), India’s largest IT services firm, fell by more than 4.5%.
- Tech Mahindra and Wipro dropped between 4% and 6%, leading the Nifty IT index lower by 3% in intraday trading.
This collective slide pulled down the broader indices. The BSE Sensex ended the day in the red, while the Nifty 50 slipped below the crucial 25,300 mark.
For investors, the selloff was a grim reminder of the sector’s vulnerability to policy shifts in the U.S., a market that accounts for nearly 60% of revenues for major Indian IT companies.
Pressure on the Rupee
The currency markets mirrored the stock market’s nervousness. The rupee depreciated against the U.S. dollar as foreign investors grew wary of the earnings impact on the IT sector, which has long been India’s export powerhouse.
Currency dealers said the rupee was also weighed down by persistent equity outflows. Foreign portfolio investors (FPIs) have already pulled out nearly ₹7,945 crore from Indian equities in September alone, bringing the net outflow for the year to a staggering ₹1.38 lakh crore.
The combination of weak foreign inflows, higher costs for IT exports, and concerns about India’s current account deficit is expected to keep the rupee under pressure in the near term.
Broader Impact on the Market
While IT stocks bore the brunt, the ripple effects were seen across sectors. Banking, pharmaceuticals, and consumer goods stocks showed resilience, preventing a steeper fall in benchmarks. However, investor sentiment remained cautious.
Experts pointed out that the IT sector’s weight in both the Sensex and Nifty meant that sharp falls in its constituents almost always dragged down the broader indices. The developments also reignited debates about the need for Indian markets to diversify sectoral dependence to reduce vulnerability.
Expert Views: Analysts React
Market experts offered varying perspectives on the selloff:
- Harshubh Shah, Market Strategist: “The Nifty’s breach of 25,300 is significant. We flagged 21 to 24 September as crucial reversal dates based on technical patterns, and the visa fee shock has accelerated this downturn.”
- Ritu Kumar, IT Sector Analyst: “Margins are going to be squeezed. Companies will either have to absorb the costs or pass them on to clients, which is difficult in today’s competitive environment. This is not a short-term blip but a medium-term challenge.”
- Vikram Mehta, Currency Dealer: “The rupee is under pressure not just due to the IT story but also because FPIs are exiting in large volumes. Unless global risk sentiment improves, expect volatility.”
Political and Policy Context
The U.S. move to raise H-1B fees is being seen as part of President Trump’s broader push to restrict foreign labor and encourage domestic hiring. This has long been a contentious issue in Indo-U.S. relations.
For India, the timing could not be worse. With elections around the corner, the government faces pressure to show resilience in the face of protectionist U.S. policies. New Delhi is expected to raise the issue with Washington in upcoming trade talks, though experts believe immediate relief is unlikely.
The Ministry of External Affairs said it was “closely monitoring” the developments and would “take up the matter at appropriate forums.”
The IT Sector at a Crossroads
The latest episode underscores the structural vulnerabilities of India’s IT sector. For decades, the industry has thrived on outsourcing contracts, particularly from North America. But the combination of rising protectionism, automation, and competition from other countries has put the traditional model under strain.
Indian IT giants have been diversifying into digital services, cloud computing, and artificial intelligence, but these transitions take time. Meanwhile, the dependence on H-1B visas remains high, making them susceptible to policy shocks.
Investor Sentiment and Retail Reaction
For retail investors, Monday’s decline sparked panic selling, particularly in mid-cap IT stocks. Brokerages reported increased activity as small investors rushed to cut losses.
However, some long-term investors saw the decline as a buying opportunity. “These are fundamentally strong companies with global client bases,” said a Mumbai-based fund manager. “Policy risks are real, but the long-term growth story for digital transformation is intact.”
Foreign Portfolio Investor Outflows
The continuing withdrawal of FPIs adds another layer of concern. According to data from the National Securities Depository Limited (NSDL), foreign investors have pulled out nearly ₹8,000 crore from Indian equities in September 2025 alone.
This comes on top of sustained outflows earlier in the year, with the cumulative tally touching ₹1.38 lakh crore. Analysts attribute this to a mix of global factors—rising U.S. interest rates, a stronger dollar, and risk aversion—as well as domestic concerns over earnings growth.
Technical View: Market Reversal Points
Technical analysts flagged September 22 and 24 as potential inflection points for the Nifty. According to chart patterns, the index faces stiff resistance around 25,500 and could test lower levels if selling pressure persists.
Volumes on Monday were significantly higher than average, indicating strong institutional participation in the selloff. This raises the possibility of further corrections unless positive triggers emerge soon.
What Lies Ahead
Looking ahead, market participants will be watching several key factors:
- U.S.-India Trade Talks: Any softening of Washington’s visa stance could soothe nerves.
- FPI Flows: Continued outflows could exacerbate volatility.
- Corporate Earnings: The next quarterly results will reveal how IT companies plan to manage increased costs.
- Rupee Trajectory: A further decline could make imports costlier and impact inflation.
- Domestic Policy Response: Investors will look for measures from the Indian government to support the IT sector.
The events of 22 September 2025 mark a stark reminder of the global interconnectedness of Indian markets. A policy decision thousands of miles away in Washington led to billions in value being wiped off Dalal Street.
While the immediate shock was concentrated in IT stocks, the broader implications for investor sentiment, foreign inflows, and currency stability cannot be ignored. As India’s economy becomes more integrated with global markets, such external shocks will test the resilience of its financial system.
For now, the message is clear: volatility is here to stay, and investors must brace for a bumpy ride in the weeks ahead.