Weak rupee no panacea for IT stocks

R Yegya Narayanan Updated - March 12, 2018 at 09:06 PM.

Despite rupee breaching the Rs 59 to a dollar mark, IT stocks came under selling pressure with the frontline IT counters suffering the most on the NSE today.

There are also indications of investor confidence returning with investors shifting their attention towards the stocks of companies having a basic impact on the economy rather than sticking to defensive sectors like IT, pharma and FMCG.

Shift in investor focus

A look at the list of biggest gainers vs biggest losers in the CNX Nifty would show the extent to which the investor focus has shifted. The list of major gainers was packed with metal, mining, banking and automobile stocks while at the bottom were IT, pharma and FMCG counters.

Gainers, losers

Hindalco, Jindal Steel & Power, NMDC and Tata Steel were the stocks that made it to the top gainers’ list from the metal/mining sectors.

Among the banks, PNB, BoB and SBI were the major gainers. From the auto sector, Bajaj Auto, Hero MotoCorp, Maruti and Tata Motors witnessed significant gains.

At the other end, the major losers were HCL Tech, TCS, Wipro and Infosys from the IT pack, Sun Pharma and Dr.Reddy’s from pharma and ITC from FMCG sector.

Hindalco was up by Rs 5.30 to Rs 160.50, NMDC gained Rs 5.10 to Rs 185.90, Jindal Steel was trading at Rs 330, a gain of Rs 8.45, PNB jumped by Rs 25.35 to Rs 997.50, BoB spurted by Rs 19.95 to Rs 889.45, Tata Steel was up by Rs 12.05 to Rs 538.85, Bajaj Auto jumped by Rs 39.60 to Rs 2,009.75, Maruti was trading at Rs 2,368.95, a gain of Rs 32.10, Hero MotoCorp was up by Rs 33.30 to Rs 2,495, SBI was trading higher by Rs 28.30 at Rs 2,673.50 and Tata Motors was up by Rs 3.95 at Rs 424.85.

The frontline IT counters headed the losers’ list. HCL Tech was down by Rs 38.10 to Rs 1,310.20, TCS shed Rs 44 to Rs 2084.60, Wipro was down by Rs 6.85 to Rs 487.35 and Infosys lost Rs 46.80 to trade at Rs 2,970.40. Sun Pharma was down by Rs 4.95 to Rs 598.20 and Dr. Reddy’s shed Rs 19.45 to Rs 2,318.

Weak rupee

The rupee was quoting at Rs 59.35 per dollar. But rupee’s weakness against the greenback did not come as a relief to the IT stocks, more so as investors were getting greater confidence of an economic turnaround and are willing to embrace the growth story.

Liquidity infusion

The RBI Governor’s decision to hold the rates steady and the decision to inject greater liquidity into the banking system by cutting SLR that would pump in Rs 40,000 crore into the system and the economic data from China that led to a belief that demand for metals would gather momentum all contributed to a change in investor preference which reflected in the market gainers and losers this morning.

Published on June 4, 2014 06:58