IT stocks cheer rupee fall, gain 3.5 per cent in weak market trend

IT stocks on Friday gained up to 3.5 per cent in an otherwise weak stock market, as sentiments turned buoyant amid weakness in rupee's value against the US currency.

The rupee breached 57-level to the dollar for the second day in a row. It has depreciated 5.2 per cent since the start of May.

A stronger dollar boosts the sales of software firms in rupee terms.

Shares of Tata Consultancy Services (TCS) rose 3.48 per cent to close at Rs 1,523.10 while Wipro was up 1.67 per cent to Rs 335.60 on the Bombay Stock Exchange.

Shares of Infosys went up by 0.80 per cent, Hexaware Tech (2.43 per cent) and Tech Mahindra (1.26 per cent).

"IT stocks such as TCS, Hexaware, Wipro traded in green. Rising USDINR created buying interest in these stocks," said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.

Led by the gains in these stocks, the BSE IT index settled 1.59 per cent higher at 6,138.27 and was the top gainer among the 13 sectoral indices.

Analysts said large IT companies benefit from a weaker rupee, as it positively impacts their profit margins. Big IT companies earn a major chunk of their revenues in dollar from their US clients.

"IT stocks saw buying interest despite the overall index falling as the rupee hit one-year low below the 57-mark and weakened further against the dollar," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.

Meanwhile, the BSE Sensex ended the day at 19,429.23, down 90.26 points.

With inputs from PTI