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.
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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