rupeedesk.in
Stocks of major information technology companies are seen in a range next week with a positive bias, we see the sharp fall in Indian rupee against the greenback likely benefitting the companies as the Apr-Jun quarter draws to a close. The rupee breached the 60/$1 level on Jun 26 and fell to a record low of 60.75 to a dollar, weighed down by dollar purchases of crude oil importers. The lack of support from the Reserve Bank of India near the psychologically crucial level triggered stop losses by banks, exacerbating the rupee's losses. Cross-currency movements directly impact the earnings of Indian information technology companies, as most large players in the sector get around 80% of their revenues from overseas. A 1% depreciation in the value of the rupee leads to as much as 50 basis point gains in the operating margins of most information technology companies.However, on the back of heartening current account deficit numbers, the rupee ended up at 59.31 a dollar yesterday against 60.19 Thursday. The current account deficit moderated sharply to 3.6% in Jan-Mar from 6.7% in Oct-Dec. For the year ended Mar 31, the current account deficit stood at 4.8% of gross domestic product, up from 4.2% a year ago. However, this was below the 5% figure for 2012-13 (Apr-Mar) that had been estimated by RBI Governor D. Subbarao in recent statements. In the next few trading sessions, analysts and investors will continue to eye Infosys as it prepares to announce its Apr-Jun results on Jul 12. The sharp fall in the Indian currency has given analysts and investors of the company hopes that Apr-Jun quarter may turn out to be better-than-expected.
Stocks of major information technology companies are seen in a range next week with a positive bias, we see the sharp fall in Indian rupee against the greenback likely benefitting the companies as the Apr-Jun quarter draws to a close. The rupee breached the 60/$1 level on Jun 26 and fell to a record low of 60.75 to a dollar, weighed down by dollar purchases of crude oil importers. The lack of support from the Reserve Bank of India near the psychologically crucial level triggered stop losses by banks, exacerbating the rupee's losses. Cross-currency movements directly impact the earnings of Indian information technology companies, as most large players in the sector get around 80% of their revenues from overseas. A 1% depreciation in the value of the rupee leads to as much as 50 basis point gains in the operating margins of most information technology companies.However, on the back of heartening current account deficit numbers, the rupee ended up at 59.31 a dollar yesterday against 60.19 Thursday. The current account deficit moderated sharply to 3.6% in Jan-Mar from 6.7% in Oct-Dec. For the year ended Mar 31, the current account deficit stood at 4.8% of gross domestic product, up from 4.2% a year ago. However, this was below the 5% figure for 2012-13 (Apr-Mar) that had been estimated by RBI Governor D. Subbarao in recent statements. In the next few trading sessions, analysts and investors will continue to eye Infosys as it prepares to announce its Apr-Jun results on Jul 12. The sharp fall in the Indian currency has given analysts and investors of the company hopes that Apr-Jun quarter may turn out to be better-than-expected.
