Tech Mahindra, Persistent, IT stocks fall up to 6% — Should this dip be used to buy?

Shares of India's IT companies, Persistent Systems, Tech Mahindra, LTIMindtree, Mphasis, and Coforge, along with other largecap IT names like TCS, Infosys and HCLTech, fell between 3% and 6% on Monday, September 22, in reaction to the recent H-1B visa developments.

The White House issued a slew of clarifications on Sunday evening, which showed that the new $1,00,000 visa fee for H-1B applicants is only applicable to new petitions and not for those who have already petitioned for the same prior to September 21, and on those who are going to renew their visas.

Most of the Midcap IT stocks, from Persistent Systems to Coforge, and Mphasis, reiterated to the exchanges that these developments will have little to no impact on their business. You can read more on that here.

Since Nifty IT index hit its record high in December 2024, the index is down 22%. Socks like TCS, HCLTech, Infosys, are down between 20% to 30% from those December 2024 levels. However, should today's fall be used as a buying opportunity for the individual IT names?

Manik Taneja of Axis Capital said that a potential fall in the IT stocks can present an opportunity to add some positions. He highlighted Wipro, Infosys, Sagility and Hexaware Technologies among its top picks within the IT space.

Taneja said that for Persistet Systems, he sees an impact of 7% to 8% on its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), while for Tech Mahindra, he sees a 4% impact.

"I would say, if there is a very sharp fall in the stocks today, probably that provides an opportunity to add on to these names. Outside of the current visa related challenges, the challenge that the Indian IT services sector essentially is facing is continuing moderation in terms of growth, and given the maturity and the fact that with the way macro essentially seems to be playing there is concern now on as to how CY26/FY27 plays up," Taneja said.

Nomura echoed Taneja's sentiments by reiterating in its note that any sharp correction in these stocks would be an opportunity to accumulate.

The brokerage highlighted Infosys and Cognizant among its top picks within the largecap IT space, and Coforge and Firstsource within the midcap IT basket.

Tech Mahindra is currently the top loser on the Nifty IT index, while Midcap IT names like Persistent, Cofoge, LTIMindtree and Mphasis are also down a similar quantum. Largecap IT names like TCS and Infosys are aiming to recover from their opening lows.