The Hindu Business Line : IT stocks jump on weak rupee

Mumbai, Aug. 26 A weakening rupee pushed up information technology (IT) stocks on Tuesday. The BSE IT index closed up 0.86 per cent from its previous close.

The IT index has climbed 7.87 per cent from a month ago and 0.08 per cent over the past week.

Long-term buy

But this will not sustain for too many days, said Mr Alex Mathew, Head of Research at Geojit Financial Services.

The overall sentiment for the IT sector is rather negative, considering the uncertainty in the US economy, according to him. “We are not recommending a long-term buy for these stocks.”

In Tuesday’s trade, six stocks in the IT index advanced while five declined. The major gainers were Satyam Computer, Wipro and TCS. Satyam gained 3.25 per cent to Rs 406.10; Wipro 2.25 per cent at Rs 428.65 and TCS moved up 1.85 per cent at Rs 832.35.

IT bellweather Infosys was amongst the worst performing stocks of the day. The stock was down 0.32 per cent at Rs 1697.60. “Even though Infosys announced its purchase of UK-based Axon on Monday, the stock was down on Tuesday as many brokerages, including foreign brokerages, felt that the transaction would lead to dilution of Infosys’ operating margins and earnings in the first year,” said Mr Sanjay Someshwar, a sub-broker with Ventura Securities.

Annual guidance

The other IT scrips that advanced on Tuesday include Aptech (1.05 per cent), HCL Technologies (2.77 per cent), i-flex Solutions (1.59 per cent) and Tech Mahindra (2.88 per cent).

“Investors feel that a rising dollar would mean that IT companies can now hike their annual guidance for profits,” the head of research at stock broking firm said. But unless situation in the US improves, these stocks would come under pressure, he added.

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