Fed taper talk boosts IT stocks; HCL Tech, Wipro, Infosys hit 52-week highs

NEW DELHI: Shares in most of the technology stocks rallied to record highs even though the benchmark indices lost momentum in trade on Thursday, after US Federal Reserve decided to taper its quantitative easing (QE3) programme by $10 billion per month.

Bucking the trend, shares of Infosys, Tech Mahindra, Wipro and HCL Technologies rallied 2-5 per cent to touch their respective record highs in a subdued market.

Although tapering in any form will result in a knee-jerk reaction across emerging markets, it should also augur well for export-liked sectors as EM currencies are likely to weaken, according to analysts.

“I would be positively biased towards the exporting sectors as directionally, the Fed will move towards some easing on the amount of monthly purchases they make,” said Jitendra Sriram, Director & Head of Research, HSBC Securities in an interview with ET Now.

“In that regard, I would expect that dollar to strengthen and EM currencies to weaken. One needs to be positively biased towards exports whether it is healthcare, IT or even manufactured exports,” he added.

Apart from the rupee factor, most market analysts are positive on IT sector given the fact that developed markets such as European zone or the US are showing incredible traction. They are on a recovery phase right now.

“IT stocks have largely built in the gains of rupee depreciation but remember the US economy is recovering and that is why all this whole news of tapering etc. is coming through,” said Rakesh Arora, Managing Director and Head of Research, Macquarie Capital Securities.

“Looking at the whole Indian economy and the recovery which was driven by exports it is difficult to ignore IT at this juncture and more so when the tapering risk is there and rupee can become weak again,” he added.

At 11:40 a.m.; BSE IT index was trading 2.1 per cent higher at 8,805 as compared to 0.7 per cent fall in the BSE Sensex.

Tech Mahindra rallies over 3 per cent to touch its 52-week high of Rs 1782.45. The stock was trading 3.05 per cent higher at Rs 1,779.

HCL Technologies rallied nearly 5 per cent to hit its 52-week high of Rs 1257. The stock pared some of the morning gains and was trading 3.4 per cent higher at Rs 1240.

Infosys surged as much as 2.4 per cent from its previous close to hit fresh 52-week high of Rs 3540. The stock pared some of the morning gains and was trading 1.8 per cent higher at Rs 3522.

Wipro rallied as much as 2.2 per cent to hit its 52-week high of Rs 533.90. The stock was trading 2.1 per cent higher at Rs 533.45.

TCS was trading 2.05 per cent higher at Rs 2096.50. The stock hit a low of Rs 2061 and a high of Rs 2108.90 in trade today.