The fall in the rupee’s value to record low levels in recent days is coming to the rescue of exporters in the December 2016 quarter, at a time when the external environment was proving challenging.

As the rupee plunged to 68.86 against the dollar on November 24, with the expectation that it will remain under pressure, the outlook for exporters and their share prices have brightened.

BusinessLine has considered companies from CNX 500 whose exports as a percentage of total revenues are 50 per cent or more. According to data provided by Capitaline, there are 72 such companies. While the list of gainers is made up primarily of companies in the information technology and pharmaceuticals space, a few textiles, jewellery, chemicals and auto-components players too are seen making gains.

These stocks have risen up to 22 per cent in the past one week compared to the benchmark Nifty 50’s gains of 1.7 per cent.

Mid & small-cap play

Partly, the rise in the shares of the exporters is due to a rebound in the mid- and small-cap indices; not all are in large companies in the Nifty 500, and some are also part of the mid and small-cap segments. Nifty free float mid- and small-cap indices have gained 3.8 per cent and 4.9 per cent respectively in the past one week after falling faster than the benchmark indices around the time of the US elections. The Nifty 500 has also gained 2.5 per cent.

The outlook on the rupee remains weak as the dollar is strengthening due to rising yields and expectations of a rate hike in the US. Foreign institutional investors have been on a selling spree in both the debt and equity markets since Donald Trump’s victory on November 9.

Some analysts expect the rupee to hit 70 against the dollar. “The external factors will continue to exercise pressure until such time as there is more clarity on the policies of Donald Trump. The immediate target would be ₹69/$ in the absence of aggressive intervention by the RBI,” said Madan Sabnavis, chief economist of Care Ratings.

IT better than pharma

Ajay Bagga, executive chairman, OPC Asset Solutions Private Ltd, expects the rupee to remain under pressure for a while and is bullish on IT and pharma. “Its a story of a strong dollar and a weak emerging market currency. The ten-year yield in the US has gone up from 1.8 per cent to 2.35 per cent after Trump’s win. I expect a rate hike on December 14 and two more hikes in 2017,” he said.

The IT sector will be the biggest beneficiary of a strong dollar, followed by pharmaceutical companies. Sarabjit Kour Nangra, vice president—IT, at Angel Broking, is more bullish on IT than on pharma as the former’s billing is predominantly in dollar but costs are mostly in rupees, unlike pharma companies, which also import their raw material in dollars.

The CNX IT and CNX pharma indices have gained 5.8 per cent and 3.4 per cent, respectively, in the past one week. The top gainers — Bliss GVS Pharma, Tata Elxsi, Shilpa Medicare, Sharda Cropchem and Intellect Design Arena — are from the IT and pharma sectors.

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