Techs Set To Flounder As Greenback Wilts

IT majors earn chunk of their revenues in US dollars

Stocks of domestic technology companies, which earn around 60-70 per cent of their revenues in US dollars, are expected to languish till a clear signal emerges on the valuation of the greenback.

The recent turmoil in the global foreign exchange markets has delivered a body blow to these companies, as their rupee realisations are critically dependant on how the dollar fares against other major world currencies.

This is simply so because every time the dollar weakens (the rupee strengthens), their realised dollars are worth fewer rupees.

Since their payments are largely in rupees, this means a squeeze in margins. Also, a weaker dollar puts pressure on the US-based clients