IT stocks decline as rupee strengthens

Five IT stocks declined 0.27% to 3.14% at 13:55 IST on BSE after recent gains in rupee against the dollar.

Meanwhile, the BSE Sensex was up 27.39 points, or 0.11%, to 24,635.26.

HCL Technologies (down 3.14%), TCS (down 0.56%), Infosys (down 0.27%), MphasiS (down 2.73%) and Wipro (down 1.03%) edged lower.

Persistent Systems rose 0.39%.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 67.30, compared with its close of 67.335 during the previous trading session. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Meanwhile, the Union Budget 2016-17 announced on 29 February 2016 is mixed for the technology and services sector. Industry association Nasscom believes, in the backdrop of global economic volatility, that there are unmet expectations on policy announcements in the budget that enable ease of doing business for the IT sector. The budget partially covers its wish list on policy bottlenecks, including ease of business, nurturing start-ups, products and e-commerce sector. Domestic IT services and software companies such as TCS, Infosys, and Persistent Systems can look forward to service the technological initiatives announced in the budget and convert them into opportunities for growing their domestic business as well as help the government to increasingly digitize the economy. The budget also left IT services sector disappointed as various demands such as clarity on transfer pricing, exemption from minimum alternate tax (MAT) for special economic zone (SEZ) units, relief from service tax and VAT double taxation have not been addressed.

Powered by Capital Market - Live News