IT shares tumble on strong rupee

Eight IT shares fell by 0.44% to 3.71% at 8:59 IST on BSE after the rupee rose to its strongest levels in 11 months against the dollar today, 19 May 2014.

Infosys (down 3.71%), Wipro (down 3.61%), TCS (down 3.12%), HCL Technologies (down 3.09%), Hexaware Technologies (down 2.37%), Tech Mahindra (down 1.62%), Oracle Financial Services Software (down 0.91%) and CMC (down 0.44%), edged lower.

The S&P BSE IT index fell 2.98% to 8,384.83. It underperformed the S&P BSE Sensex, which was up 0.62% at 24,270.34.

The S&P BSE IT index had underperformed the market over the past one month till 16 May 2014, sliding 1.80% compared with 8.28% rise in the Sensex. The index had also underperformed the market in past one quarter, falling 7.70% as against Sensex's 18.44% rise.

The rupee rose on expectations of continued robust foreign buying in domestic shares and debt after the Bharatiya Janata Party (BJP) swept the country's elections.

At 9:48 IST, the rupee was trading at 58.4650 per dollar. The pair had closed at 58.79/80 on Friday, 16 May 2014.

A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

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