I.T Stocks Outlook for the week – 04 to 08.08.2014
( www.rupeedesk.in )
( www.rupeedesk.in )
The movement of the rupee against
the dollar is likely to dictate the trend for information
technology stocks next week after
the Indian currency ended at over a four-month low
against the dollar following an
over 1% fall yesterday.
The rupee fell beyond the 61 per
dollar mark to end at 61.1700 as against 60.5500 on
Thursday on the back of US currency's
broad strength and a sharp fall in domestic
equities.
IT companies bill majority of
their revenues in dollars and typically for every 1% change
in the INR/USD equation, margins
of Indian IT companies are impacted by 25-35 basis
points. The rupee depreciated
nearly 1.8% against the greenback this week.
The rupee is expected to open
stronger next week after muted US payroll data which led
to some recovery in euro and
other currencies. Also, the monetary policy review of
Reserve Bank of India will dictate
the foreign exchange as well as the stock market
movement in the initial part of
the week.
However, some market participants
believe that information technology stocks could see
some upside if the Indian
currency weakens in the second half of the week, as most of
these stocks succumbed to profit
booking this week.Markets sold off in the second half of
the day to close 1.5% lower. Weak
global markets and continuing geo-political tensions
rode over the positive core
sector growth data released in India yesterday.
Today, all the top five IT stocks
closed in the red, despite the depreciation of the rupee, as
Sensex and Nifty fell.Most IT
companies have announced their results will be taking a relook at the valuations of IT stocks.
