www.rupeedesk.in
Stocks of major information technology companies are seen rangebound in the coming four sessions on likely consolidation and profit booking following the recent surge due to a weak rupee against the dollar. echnology companies have been trading positively since April, when the Indian rupee started slipping against the greenback. However, with the rupee strengthening over the last two days see come consolidation in the stocks.
We see favourable rupee movement helping companies report an operating margin improvement of 20-50 basis points in the coming few months. 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.
We expect margin uptick in the near term for Indian IT due to sharp depreciation. Full impact of the currency depreciation will be reflected in Q3FY14 quarter (Oct-Dec). Most of the Indian IT companies are sitting on thin hedge-book position which allows them to reap maximum benefit of currency depreciation. The companies will have hedging losses in the quarter that would be offset by financial asset translation gains.
Stocks of major information technology companies are seen rangebound in the coming four sessions on likely consolidation and profit booking following the recent surge due to a weak rupee against the dollar. echnology companies have been trading positively since April, when the Indian rupee started slipping against the greenback. However, with the rupee strengthening over the last two days see come consolidation in the stocks.
We see favourable rupee movement helping companies report an operating margin improvement of 20-50 basis points in the coming few months. 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.
We expect margin uptick in the near term for Indian IT due to sharp depreciation. Full impact of the currency depreciation will be reflected in Q3FY14 quarter (Oct-Dec). Most of the Indian IT companies are sitting on thin hedge-book position which allows them to reap maximum benefit of currency depreciation. The companies will have hedging losses in the quarter that would be offset by financial asset translation gains.
