IT stocks rise as rupee weakens against dollar continues
Defying weakness in the broader market, IT stocks staged a comeback after yesterday's sharp losses and rose by almost 2% on the Bombay Stock Exchange in early trade today as the Indian rupee continued to lose ground against the US dollar.business Updated: Sep 23, 2011 11:51 IST
Defying weakness in the broader market, IT stocks staged a comeback after Thursday's sharp losses and rose by almost 2% on the Bombay Stock Exchange in early trade on Friday 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% to a high of Rs 1,014.50 on the BSE.
Similarly, shares of Infosys gained 1.56% to an early high of Rs 2,390.50, while Wipro went up by 1.98% to a high of Rs 347.50.
These frontline IT stocks suffered losses over 4% in Thursday's bloodbath in the market, which saw the benchmark Sensex lose over 700 points.
The 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 to improve their profit margins.
Buying was also seen at the counters of other IT companies as well, with HCL Tech gaining 1.49%, Tech Mahindra trading 0.52% higher and Mphasis rising by 2.25%.
Led by gains in these stocks, the BSE-IT index was trading 1.11% higher at 5,057.45 and was the top performer among the 13 sectoral indices in morning trade on Friday.
Indian IT companies earn about 85% 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 on Friday.