IT Stocks Crash: Infosys, TCS contribute to more than half of near ₹1 lakh crore market cap erosion

India's two largest IT services providers, Tata Consultancy Services Ltd. (TCS) and Infosys Ltd. were contributors to more than half of the close to ₹1 lakh crore that these companies lost in market capitalisation on Monday, September 22.

India's IT stocks took it on the chin on Monday after the latest changes to the H-1B visa norms announced over the weekend, raised questions on the viability of the companies' business models, despite many of them clarifying that the move will not have any material impact on their operations.

Barring Oracle Financial Services, all constituents of the Nifty IT index ended with losses between 1% to 4%.

Shares of TCS, India's largest IT services provider fell 3%, while those of Infosys also fell by a similar quantum.

The fall in TCS led to a market cap erosion of nearly ₹35,000 crore, while the fall in Infosys took away ₹17,000 crore worth of investor wealth, which is nearly the same amount that the company plans to spend on its share buyback (₹18,000 crore).

Together, both companies contributed to over ₹51,000 crore out of the ₹85,000 crore market cap that these companies lost on Friday.

Other stocks like LTIMindtree, HCLTech, Wipro, Tech Mahindra and others lost between ₹3,000 crore to ₹8,000 crore in market capitalisation.

Stock	Market Cap Lost (₹ Crore)
TCS	34,000
Infosys	17,000
LTIMindtree	7,300
HCLTech	7,500
Wipro	5,850
Tech Mahindra	4,500
Persistent Systems	3,700
Mphasis	2,750
Coforge	2,583

Most of India's Mid-sized companies, from Persistent Systems, to Coforge, to Hexaware and Firstsource Solutions informed the exchanges late Sunday evening, that the recent moves will not have any major impact on their operations. Largecap firms, the bigger beneficiaries of the visa norms, have not quantified the impact yet.

While analysts from Jefferies and Citi highlighted that the moves could prove to be a drag on the profitability of these companies going forward, CLSA saw no major impact, while Nomura said that any major fall would be a buying opportunity.