Infosys, TCS, Wipro shine in weak market as rupee hits 13-month low

MUMBAI: Technology stocks bucked the broader market trend as the rupee weakened to its lowest level in 13 months. Pull-back was seen majors such as Infosys and TCS, which had corrected sharply in the last few sessions.

The BSE IT Index closed up 1.66 per cent against 1.97 per cent fall in S&P Sensex.

The Indian rupee, alongwith other global currencies, is weakening against the US dollar. Outflows of funds from riskier assets also put pressure on the Indian rupee.

The partially convertible rupee was at 63.41 per dollar, down 47 paise, against its previous close of 62.94/95. The unit earlier dropped to intraday low of 63.54.

Indian IT companies tend to benefit from a weak rupee as it improves their margins and profitability. Not only currency, the sector is likely to benefit from pick-up in the US economy.

“We recommended buying TCS, Infosys, Tech Mahindra, HCL Tech, Persistent System and Mindtree yesterday. These are some of the names in the IT pack; as a disclosure, we do have a positive coverage. From an investment angle one can definitely buy them. It is not only the rupee-dollar equation that we are banking on, we are more optimistic on the business environment outlook going forward,” said Gaurang Shah, VP, Geojit BNP Paribas Financial Services.

According to P Phani Sekhar, Fund Manager-PMS, Angel Broking, Indian IT can grow 15-17 per cent in rupee terms and around 10-12 per cent in dollar terms.

“Relatively this is a strong sector and valuations, as compared to say that other defensive like pharma or FMCG, are much more attractive. Infosys is trading at 14.5 times and TCS at around 17.5 times. These are not at all difficult multiples when these companies will grow at around 20 per cent,” he told ET Now.

HCL Tech closed at Rs 1,554.40, up 4.58 per cent, on the BSE. It rallied 5.28 per cent to touch intraday high of Rs 1,564.80.

TCS closed at Rs 2443.15, up 3.40 per cent, on the BSE. It rallied 4.01 per cent to touch intraday high of Rs 2,457.65.

Tech Mahindra ended at Rs 2,533.65, up 1.51 per cent, on the BSE. It gained 3.55 per cent to touch intraday high of Rs 2584.75.

Infosys closed at Rs 1937.65, up 0.69 per cent, on the BSE. It moved up 1.43 per cent to touch intraday high of Rs 1,952.
NEW DELHI: The S&P BSE IT index rose amid a sagging market on Tuesday, as the rupee weakened to its lowest level in 13 months fueling sharp rally in IT stocks.

Reacting to the news, TCS surged over 3 per cent in intraday trade.

Infosys, Wipro were also in green; gaining over 1 per cent each.

A weak rupee positively affects the operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

"IT continue to remain attractive and rupee depreciation will definitely provide opportunity for the sector, but at the same time we are looking for the other sectors also because the economies are improving and we are not focusing on the next 10 days," says BP Singh, Executive Director & CIO-Equities, Pramerica Mutual Fund.

"We are focusing for the longer period and where we see the rest of the sectors like the infrastructure, the capital goods, etc. which actually in our opinion is the time to pick up at this point in time," he adds.