New Delhi, Aug. 27 -- India's technology sector absorbed its worst single-day loss in weeks on Tuesday, pulling benchmark indices into negative territory as traders weighed compounding headwinds: a 40 percent decline in U.S. H-1B visa approvals for India's largest IT firms and market-wide caution ahead of Nvidia Corp.'s quarterly earnings report due after the American close.

the Nifty IT index dropped 1.47 percent, its sharpest fall this month. The FMCG index lost 0.95 percent.

The technology selloff centered on a policy shift that India's largest IT exporters have been trying to quantify since February. The U.S. government's restructured H-1B visa program, which took effect on February 27, moved allocation to a merit-and-salary-thresho...