IT stocks rise as rupee remains weak against dollar

Mumbai: Defying weakness in the broader market, IT stocks staged a comeback after yesterday’s sharp losses and rose by almost 2 percent on the Bombay Stock Exchange in early trade today as the Indian rupee continued to lose ground against the US dollar.

Shares of the country’s biggest software exporter TCS, the top performer among the Sensex blue-chips, jumped 1.94 percent to a high of Rs 1,014.50 on the BSE.

Similarly, shares of Infosys gained 1.56 percent to an early high of Rs 2,390.50, while Wipro went up by 1.98 percent to a high of Rs 347.50.

[caption id=“attachment_90515” align=“alignleft” width=“380” caption=“Frontline IT stocks suffered losses over 4 percent in yesterday’s bloodbath in the market. Reuters”]  [/caption]

These frontline IT stocks suffered losses over 4 percent in yesterday’s bloodbath in the market, which saw the benchmark Sensex lose over 700 points.

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The Indian rupee tumbled by 25 paise to an almost 28-month low of Rs 49.82 per US dollar in early trade on the Interbank Foreign Exchange today as the American currency firmed up against other major rivals overseas.

Analysts said large IT companies benefit from weakness in the rupee as it helps in improve their profit margins.

Buying was also seen at the counters of other IT companies as well, with HCL Tech gaining 1.49 percent, Tech Mahindra trading 0.52 percent higher and Mphasis rising by 2.25 percent.

Led by gains in these stocks, the BSE-IT index was trading 1.11 percent higher at 5,057.45 and was the top performer among the 13 sectoral indices in morning trade today.

Indian IT companies earn about 85 percent of their revenues from exporting software services to the US and European markets.

Hence, as the rupee weakens against the dollar, it improves their earnings when converted into the domestic currency.

Meanwhile, the BSE benchmark Sensex was trading lower by 87.36 points at 16,273.79 at 1040 hours today.

PTI