IT stocks reboot as Rupee goes downhill

Also, is it a good idea to buy into battered capital goods stocks?

The rupee breached the 63 per dollar mark in morning trade, tracking the Non-Deliverable Forwards (NDF) market coupled with dollar demand from Oil Marketing Companies (OMCs).

At 3:35am, the rupee was trading at 63.25-a-dollar compared with previous close of  62.48 per dollar.

Ranak Merchant speaking to Surabhi Roy says this fall in Rupee is restricting the fall in stocks of IT companies, which is already in the overbought zone.

SmartInvestor : Markets have succumbed to selling pressure for the few trading session, giving up most of the gains made in the recent rally. Where are markets headed?

Ranak Merchant : As mentioned previously, post scaling of new highs some correction / consolidation cannot be ruled out. Nifty on the other hand missed the same by a small margin and made a weekly double top near 6343 levels.

Ranak Merchant : Support to emerge near 6070 (Nifty spot) and the same to be watched on closing basis. Rupee nearing the 63.50 mark also is a cause of concern and therefore its movement too to be eyed.

SmartInvestor : What's your view on capital goods counters like BHEL, L&T, Thermax and Crompton Greaves?

Ranak Merchant : The results for most of capital good names from the likes of the above have been disappointing leading to downward pressure on the stock prices. However as the sector is already suppressed it would offer a good opportunity for investors to enter into the stocks.

Ranak Merchant : Traders to watch BHEL if 135 holds on closing for 146, L&T if 935 holds on closing for 999, Crompton Greaves above 108 only for 117, on weakness support seen near 98. Thermax can be accumulated gradually for targets of 725 (positional delivery based medium term recommendation).

SmartInvestor : IT shares are in demand on weak rupee. Do you expect the upmove to remain intact in this counter? Are there any stocks that can be SOLD at the current levels?

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