Tale of the Tape 

Good evening everyone. Welcome back to the Daily Rip!

Markets kicked off the week on a negative note, as Nifty (-0.5%) and Sensex (-0.6%) ended in the red. Trump’s strike on India’s IT sector hit sentiment overshadowing broader gains across Asian markets. Midcaps (-0.7%) and Smallcaps (-1.2%) saw even deeper cuts. The advance-decline ratio was in favour of the bears (3:2).

Most sectors ended lower too. IT stocks (-3%) led the sell-off, followed by Pharma (-1.4%) and FMCG (-0.5%). Energy (+0.7%) and Metals (+0.4%) bucked the market trend.

In today’s issue of the newsletter, we look at the H-1B changes and its impact on the IT sector, analyse the Atlanta Electricals IPO, cover buzzing stocks and more.

Honourable Mentions:

Avanti Feeds and Apex Frozen Foods dropped -3% each after US senators proposed new anti-dumping legislation that would target Indian shrimp exports. KFin Tech dropped -5% amidst reports that General Atlantic may sell 10-15% stake via block deal.

Check out the NSE 500 heatmap:

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More Bad News For IT Stocks!

IT stocks fell over -3% intraday after Trump slapped a $100k fee on all new H-1B visas! FYI - there’s been a LOT of confusion, but despite the clarifications this still represents a threat to the current outsourcing model. Here’s everything you need to know. 

Weekend recap: The White House kicked off Friday by saying the $100k charge would actually be applied annually. And that ANYONE on a H-1B who was currently outside the country would have to pay that fee when they got back. In effect, a retrospect tax on all H-1Bs that had already been issued! Naturally, massive panic followed. Luckily they did clarify and now it’s a one-time $100k fee on only new H-1B visas that will kick in from the 2026-27 lottery. 

What’s the damage: Every year, IT companies get anywhere between 1.5k to 8k H-1B visas. Out of this, roughly 10%-20% are new permits; the rest are renewals. If all firms bit the bullet and paid $100k for all of their new visas, analysts say that could result in an up to ~5% profit hit. This would be tough, but definitely not a death blow.

Now, most experts say it's unlikely IT companies will actually start paying. In the medium-term, they’ll likely shift towards hiring local talent in the US and up their offshoring (more work being done in India) and near-shoring (doing it in Canada/Mexico) components. PS - Hiring local employees is more expensive and bringing back more work to India means your billing power (aka topline) reduces. So expect pain no matter what IT companies do to adapt.

Go deeper: Make no mistake, this is the last thing the IT sector needs. In the short-term, we will see delays in new project wins + conversions. This is because contracts that required onshore H-1B work in 2027 and 2028 will now have to be renegotiated. Companies will need to figure out who bears the extra cost and how they’ll do that work now. This sucks for an industry that is already seeing negative CC revenue growth. So don’t expect a turnaround anytime soon, say experts.

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What Next For BSE?

BSE has been in the news for all the wrong reasons lately. The stock is down -25% from its all-time high but is the worst behind us or is there more pain in store? Find out as we break down the company’s pros & cons, fundamentals and brokerage views in our latest video..