IT stocks rise as rupee weakness against USD continues

Defying weakness in the broader market, IT stocks staged a comeback after Thursday's sharp losses and rose by almost 2 per cent on the Bombay Stock Exchange in early trade on Friday as the Indian rupee continued to lose ground against the US dollar.

Shares of the country's biggest software exporter TCS, the top performer among the Sensex blue-chips, jumped 1.94 per cent to a high of Rs 1,014.50 on the BSE.

Similarly, shares of Infosys gained 1.56 per cent to an early high of Rs 2,390.50, while Wipro went up by 1.98 per cent to a high of Rs 347.50.

These frontline IT stocks suffered losses over 4 per cent in Thursday's bloodbath in the market, which saw the benchmark Sensex lose over 700 points.

The Indian rupee tumbled by 25 paise to an almost 28-month low of Rs 49.82 per US dollar in early trade on the Interbank Foreign Exchange on Friday as the American currency firmed up against other major rivals overseas.

Analysts said large IT companies benefit from weakness in the rupee as it helps in improve their profit margins.

Buying was also seen at the counters of other IT companies as well, with HCL Tech gaining 1.49 per cent, Tech Mahindra trading 0.52 per cent higher and Mphasis rising by 2.25 per cent.

Led by gains in these stocks, the BSE-IT index was trading 1.11 per cent higher at 5,057.45 and was the top performer among the 13 sectoral indices in morning trade today.

Indian IT companies earn about 85 per cent of their revenues from exporting software services to the US and European markets.

Hence, as the rupee weakens against the dollar, it improves their earnings when converted into the domestic currency.

Meanwhile, the BSE benchmark Sensex was trading lower by 87.36 points at 16,273.79 at 1040 hours on Friday.