Indian information technology (IT) stocks, including industry giants such as Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, and Coforge, are experiencing heightened market focus and volatility on Friday, October 9, 2026. This attention stems from a confluence of global and domestic developments, notably new US labor program policies, a notable recovery in American Depositary Receipts (ADRs) for Infosys and Wipro, and the release of TCS's second-quarter fiscal year 2027 earnings.
US Labor Program Changes Impact IT Sector
The US Labor Department announced significant actions on Thursday evening, impacting several major technology firms. Microsoft and Adobe have been suspended from the Permanent Labor Certification Program (PERM) amidst ongoing federal investigations. Crucially for Indian IT, the department also stated it would cease accepting or processing new PERM applications from companies including Cognizant, Infosys, Capgemini, Wipro, HCL Technologies, and TCS.
Industry body NASSCOM responded by highlighting that Indian IT companies have substantially reduced their reliance on H-1B visas, concurrently expanding local hiring efforts within the US. They also noted the limited number of employees transitioning from H-1B visas to permanent residency via the PERM process.
However, analysts like Sumit Singhania, Head of Research at Bajaj Broking, anticipate immediate impacts. He suggests the changes will likely lead to increased hiring and compliance costs for affected IT firms, potentially compelling them to rely more on local talent or subcontracting. This could exert near-term pressure on operating margins. Singhania added that investors should expect "near-term volatility" as the market assesses the "extent and duration of the regulatory impact," further stressing a sector already under pressure.
ADR Recovery and AI Market Dynamics
Following the US labor news, US-listed shares (ADRs) of Infosys and Wipro initially dropped by up to four percent. However, both recovered sharply, with Wipro's ADR closing unchanged and Infosys's ADR ending 1.1 percent higher.
This recovery might be linked to new disclosures from OpenAI, which reported an annualized revenue run rate of $50 billion, lower than a previously reported $68 billion figure. The broader AI and chipmaking sectors also saw a sell-off on Thursday, with Nvidia falling 3 percent and Oracle declining over 6 percent. This, coupled with Indian IT companies' earlier statements regarding their limited dependence on the H-1B program, may have supported the rebound in their ADRs. The Indian IT sector has seen a significant correction in recent months, with leading stocks down 30-35 percent in 2026, and some losing over half their value from peak levels.
TCS Q2FY27 Earnings Under Scrutiny
TCS's second-quarter results for fiscal year 2027, released after market hours on Thursday, are another key factor influencing IT stock performance. The company's performance largely aligned with market expectations, driven by its AI vertical contributing over 10 percent of revenue and deal wins reaching $9.6 billion, within analysts' projected range.
Despite these figures, concerns linger. Manav Medewala, Research Analyst at Mirae Asset Sharekhan, pointed to signs of moderating revenue per employee, suggesting a potential plateau in productivity gains and a softer pricing environment. He noted a constant-currency growth of 0.5 percent quarter-on-quarter (QoQ), raising questions about whether AI adoption is primarily replacing existing revenue streams rather than generating substantial incremental revenue.
Technical Outlook for TCS Shares
Technically, TCS shares are trading below key daily, weekly, and monthly exponential moving averages (EMAs), indicating persistent selling pressure. Hitesh Tailor, Technical Research Analyst at Choice Broking, highlighted that the downward slope of weekly moving averages suggests that minor price pullbacks are consistently met with renewed selling interest. Momentum indicators, with the Relative Strength Index (RSI) around 35-40, reflect this weakness, though still above extremely oversold territory. Tailor identifies the Rs 2,000-2,020 zone as immediate support. A decisive weekly close below Rs 2,000, he warns, would signal a severe technical breakdown, potentially leading to a decline towards Rs 1,850-1,750.