Volatility in rupee a big worry: Nasscom

Software lobby Nasscom today said the volatility of currency movement is a concern that needs to be tackled since it hinders the planning process for the Indian software exporters.

"There is a marginal positive impact...But volatility is a concern. Now it is depreciating, but sometime ago, it was the other way round. This volatility makes it difficult to plan and this is a concern from an industry point of view," Nasscom Vice President (Global Trade Development) Ameet Nivsarkar said.

The Indian rupee tumbled by 34 paise to an almost 28-month low of Rs 49.82 per US dollar in early trade on the Interbank Foreign Exchange today.

Indian IT companies earn about 85% of their revenues from exporting software services to the US and European markets.

In morning trade, IT stocks rose by almost 2% on the Bombay Stock Exchange (BSE), defying weakness in the broader market, as the rupee continued to lose ground against the US dollar.

However, all the three major IT frontline stocks, TCS, Infosys and Wipro closed in the negative terrain.

The country's biggest software exporter TCS closed 0.38% lower at Rs 991.40 on the BSE, while Infosys ended down by 0.57% at Rs 2,340.10.

Wipro also pared its initial gains and lost 0.57% amid the overall weakness in the market.

Depreciating rupee against the dollar is believed to have a positive impact on the revenues of Indian software exporters since it would mean that exporters get more rupees per US dollar.

Buying was also seen at the counters of other IT companies, with HCL Tech gaining 1.49%, Tech Mahindra trading 0.52% higher and Mphasis rising by 2.25%.

As the rupee weakens against the dollar, it improves their earnings when converted into the domestic currency.

However, experts also say that since most of the companies have hedging plans in place to protect their income, the current fall is not going to have significant impact.

Software firms such as TCS, Infosys and Wipro, which get most of their businesses from exports to the US, hedge against currency fluctuations for qaurters in advance.