The Hindu Business Line : IT stocks gleam again as rupee tumbles

Chennai, May 6 The sudden decline in rupee’s value against the dollar on Tuesday had a positive effect on information technology stocks. These stocks surged higher on Tuesday as the rupee declined to an eight-month low against the dollar.

IT stocks moved up sharply in the last 20 minutes of trading even as the market as a whole was tumbling when TV channels flashed the news that the rupee hit its eight-month low, according to Mr Arun Kejriwal of Kris Securities.

The CNX IT index opened the day at 4341.9 and touched a low of 4305.65. The recovery took place after 2.30 pm, in the last hour of the session, and closed at 4440.35 against the previous day’s close of 4392.55. According to brokers, the rupee slipped, as oil marketing companies stepped up the purchase of the greenback during the closing hours of trade. A few others attribute the rupee fall to a UK-based bank buying to take advantage of arbitrage opportunity – selling the currency in India and buying it cheaper in the overseas non-deliverable forward market.

Taking advantage of the sudden depreciation in rupee, select brokers who had exposure in IT stocks, particularly in F&O segment, pushed up the price of major IT companies, said an analyst with a Mumbai-based brokerage. These stocks rose with low volumes, which indicate speculative interest on them, he added. In fact, in the F&O segment, the CNX IT May future shed 5 per cent in open interest, indicating profit booking when the index jumped up in the closing hours, the broker said. It, however, ended in premium at 4472.25 against the spot close of 4440.35.

Contracts on Infosys Technologies and Satyam Computer saw an increase in open interest positions and closed the day with prices on a firm note.

After getting hammered for the last 12 months due to the rupee appreciation, all the IT majors have hedged their positions for next six months. So appreciation or depreciation of rupee would not affect the bottomline of IT companies going forward, Mr Kejriwal added.

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