IT stocks firm up on weak rupee

Eight IT stocks rose by 0.35% to 1.94% at 9:27 IST on BSE as the rupee weakened against the dollar in early trade today, 4 September 2013.

Infosys (up 1.94%), Wipro (up 1.42%), TCS (up 1.34%), HCL Technologies (up 0.86%), CMC (up 0.72%), Tech Mahindra (up 0.55%), Oracle Financial Services Software (up 0.42%) and MphasiS (up 0.35%), edged higher.

The S&P BSE IT index was up 1.57% at 8,049.46. It outperformed the S&P BSE Sensex, which was up 0.71% at 18,364.45.

The S&P BSE IT index had outperformed the market over the past one month till 3 September 2013, rising 5.46% compared with the Sensex's 4.85% decline. The index had also outperformed the market in past one quarter, rising 29.35% as against Sensex's 7.02% fall.

The rupee was trading at 68.30/25 to the dollar against the Tuesday's close of 67.63/64. It fell to a record low of 68.85 last week. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

IT stocks also moved up on positive economic data in the US, which is the biggest outsourcing market for the Indian IT firms. In the US, the Institute for Supply Management's manufacturing index increased to 55.7 in August, the strongest since June 2011, from 55.4 a month earlier. Readings above 50 indicate growth. Another report showed construction spending in the US increased in July to the highest level in four years, propelled by gains in residential real estate.

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