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Last Updated : Aug 23, 2019 12:46 PM IST | Source: Moneycontrol.com

Tech stocks outperform Nifty, Sensex as rupee tumbles to 8-month low; Infosys, TCS rake in the most

Many technology companies export their services and earn money in dollar terms, hence any fall in rupee against greenback is always favourable to these companies.

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The rupee tailwind has helped technology stocks outperform benchmark indices not only on August 23 but also on a year-to-date basis.

The Nifty IT index gained more than 1 percent during Friday's trade, 8.66 percent YTD and 2.4 percent in last one year against flat trade 1 percent loss and 7 percent correction in one year for the Nifty50, respectively.

Tata Elxsi, Mindtree, TCS, Tech Mahindra, Wipro, HCL Technologies, NIIT Technologies and Infosys gained 0.7-2.8 percent. Moreover, Infosys touched a fresh record high of Rs 809.95.

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Many technology companies export their services and earn money in dollar terms, hence any fall in rupee against the greenback is always favourable to these companies.

The Indian rupee fell 23 paise intraday to 72.04 a dollar, the lowest level since November 14, 2018, following the consistent outflow of FII money due to delay in FPI surcharge rollback and slowdown concerns.

Also, the recent FOMC monetary policy minutes indicate there could not be aggressive rate cut going ahead. This pushed the dollar higher and resulted in a further fall in Indian currency.

The currency market also turned cautious ahead of the Federal Reserve Chairman Jerome Powell's highly anticipated speech later today.

"Market expects that US Federal Reserve Chairman Powell would stick with his message that the central bank has not entered a prolonged monetary easing cycle," Reliance Securities said.

June quarter numbers were largely weak-to-inline but order book remained strong for the industry.

"Although the overall June ’19 quarter was weak for the industry, a robust demand environment was demonstrated by a large order book in the

industry apart from pockets of weakness in the BFSI segment owing to the prevailing low interest rate environment in the US and Europe," Aditya Birla Capital said.

Among the largecap IT stocks Infosys & TCS reported in-line revenue performance in Q1FY20. In constant currency, the two bigwigs grew 12 percent and 11 percent YoY, respectively.

Infosys increased its FY20 revenue guidance to 8.5-10 percent from 7.5-9.5 percent earlier and saw record deal bookings of $2.7 billion. TCS continued to face softness in few American Capital Market & European Bank clients.

Most of the midcaps delivered a subdued performance with L&T Technology, L&T Infotech and Cyient missing their expectations primarily due to client-specific issues. Apart from the travel, Mindtree experienced a slow down in all segments.

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First Published on Aug 23, 2019 12:46 pm
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