IT Stocks Outlook for the week - 28.11.2016 to 02.12.2016
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The Continued weakness in the rupee against the dollar and the already beaten-down state
of technology stocks are likely to lift sentiment on stocks in the information technology
next week.
The Market participants are expected to increase their investment in the sector if today's
rally in the stocks continues next week. Frontline companies constituting the Nifty IT
index ended 5-9%, after witnessing minimal or negligible buying.
Though the view on the sector's performance is largely negative, factors such as a weak
rupee are seen leading to gains the sector in the near term. Investors will track triggers in
global markets, amid a strengthening dollar and heightened chances of a rate hike in the
US.
On Thursday, the rupee breached its previous record low, hit in August 2013, to fall to
68.86 a dollar because foreign portfolio investors continued to pull out funds from
domestic financial markets.
The favourable movement in the rupee is seen as providing respite to the IT sector, which
includes major software exporters. However, the respite is expected to be temporary, as
uncertainties surrounding the likely policies of US President-elect Donald Trump will
continue to weigh on the sector, which gets 48-85% of its revenue from the US.
Investors are expected to continue to be cautious on the sector, as Trump, during his
election campaign, had promised stringent norms on immigration and trade, which are
likely to hurt the earnings of Indian IT companies.
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