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Stocks of major information technology companies are seen positive next week on favourable rupee movement, but some consolidation is likely. The trend for IT stocks will be positive if they break their important resistance levels. However, some consolidation will be seen if they fall below their crucial support levels as well. The steep fall in the rupee against the greenback is seen having a positive impact on the sector as a whole. Information technology companies are likely to see a positive impact of the depreciating rupee in the short term, even as the fall in currency, which touched its all-time low of 68.80 against the dollar on Wednesday, continues to adversely affect the economy as a whole. Top IT companies notching an operating margin improvement of 20-50 basis points on account of favourable rupee movement. Cross-currency movements directly impact the earnings of Indian IT companies, as most large players in the sector get around 80% of their revenues from overseas. Every 1% decline in the value of the rupee is likely to result in 2% growth in profit of information technology companies. While the depreciating rupee did not help most companies in Apr-Jun due to higher cost and lower pricing, Jul-Sep numbers are likely to reflect the benefits of the rupee's steep fall.
Stocks of major information technology companies are seen positive next week on favourable rupee movement, but some consolidation is likely. The trend for IT stocks will be positive if they break their important resistance levels. However, some consolidation will be seen if they fall below their crucial support levels as well. The steep fall in the rupee against the greenback is seen having a positive impact on the sector as a whole. Information technology companies are likely to see a positive impact of the depreciating rupee in the short term, even as the fall in currency, which touched its all-time low of 68.80 against the dollar on Wednesday, continues to adversely affect the economy as a whole. Top IT companies notching an operating margin improvement of 20-50 basis points on account of favourable rupee movement. Cross-currency movements directly impact the earnings of Indian IT companies, as most large players in the sector get around 80% of their revenues from overseas. Every 1% decline in the value of the rupee is likely to result in 2% growth in profit of information technology companies. While the depreciating rupee did not help most companies in Apr-Jun due to higher cost and lower pricing, Jul-Sep numbers are likely to reflect the benefits of the rupee's steep fall.
