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| Rising rupee may dampen IT outlook |
| Sunaina Vasudev / Mumbai Oct 07, 2009, 16:31 IST |
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The IT index ended down 2.5% at 4,430. Earlier in the day, the index touched a low of 4,406.
Among the IT stocks, MphasiS tumbled 6% to Rs 627.
IT major, Wipro slumped 4.2% to Rs 573. TCS and Infosys shed around 3% each to Rs 593 and Rs 2,252, respectively.
Rolta India, HCL Technologies, Tech Mahindra, Patni Computers and Financial Technologies were down 1-3% each.
However, Oracle Financial Services gained 3% at Rs 1,867. Moser Baer added 1.3% to Rs 90.
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(Updated at 1106 hrs)
The rising rupee may be a dampener on IT stocks. The rupee has touched a fresh 12-month high today at 46.83/ $.
Analysts had indicated revenue guidance upgrades last week given improving outlook. Infosys results, due October 10, 2009, should show a 4.5% uptick over last quarter guidance, as per a Kotak Institutional Tech report. Wipro, should see 3% growth against a guideline of 0.2-2%.
The rupee rise could pinch going ahead based on the hedging positions. The current rise in the $ against other global currencies could hurt $ revenues in the near term for non $ billings. TCS and Tech Mahindra have high non $ denominated billings, as per an IDFC-SSKI report..
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IT companies hedge position at the end of Jun’09
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Hedge Position ($m)
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Forwards
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Options
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Total
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Sep 09 (Estd) revenue
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Hedge as a % of Revenue (%)
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| Infosys |
413 |
187 |
600 |
1,146 |
52 |
| TCS |
965 |
1,982 |
2,947 |
1,520 |
194 |
| Wipro |
840 |
360 |
1,200 |
1,062 |
113 |
| HCL Tech |
810 |
0 |
810 |
619 |
131 |
| Tech Mahindra |
700 |
0 |
700 |
232 |
301 |
| Patni |
320 |
0 |
320 |
167 |
191 |
| Note:GBP and EURO hedge converted at Jun'09 spot rate; *TechM has USD/GBP forward of 290m at 1.83 and INR/USD forward cover for US$700m |
| Source: IDFC SSKI report |
The BSE IT index is down 1.7% at 4,470, despite the Sensex rising 0.6%.
IT major Infosys is down nearly 3% at Rs 2,244. The counter has seen trades of around 59,800 shares so far on the BSE. TCS too has declined nearly 3% to Rs 594 on a volume of around 424,400 shares. Wipro has dropped 2.3% to Rs 585.
However, as per an IDFC SSKI report, TCS, Tech Mahindra and Patni could benefit in the near term from a strengthening rupee because of significant hedges based on end-Jun 09 data.
Tech Mahindra is down nearly 2% at Rs 917, and Patni Computers is unchanged at Rs 433. Rolta has slipped over 1% to Rs 199.
Aptech and Financial Technologies, however, have bucked the trend and are up 2% and 1% each at Rs 269 and Rs 1,313, respectively.
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