I.T Stocks Outlook for the week – 23 to 27.06.2014
(www.rupeedesk.in)
(www.rupeedesk.in)
Movement of the rupee against the greenback will set the
tone for stocks of information
technology companies over the next week. The geopolitical
conflict in Iraq has kept the
rupee under pressure in the last few sessions on fears of a
disruption in crude oil supplies
and rise in inflation.
Outlook for the IT sector remains positive in the backdrop
of weak rupee, as it improves
companies' revenue visibility. Any further fall in the rupee
could trigger buying in these
stocks. Typically, for IT companies, every 1% fall in rupee
adds about 20-30 basis points
to the operating profit margins. Also, investors are now
slowly moving towards non- cyclical stocks such as IT, We are expect rupee
trading weak over the next few sessions
due to the tensions in Iraq. Further, worries over higher
inflation may prove negative for
the Indian rupee.
Outlook for the sector also got a boost from the US Federal
Reserve giving a positive
assessment of the world's largest economy, and its
commitment to retaining its
accommodative monetary policy. The US accounts for a
majority of Indian IT companies'
revenue. The biggest gainers in the sector during the week
were majors Infosys and Tata
Consultancy Services that gained 4.1% and 3.6%,
respectively.
