Connect with us

Hi, what are you looking for?

Bnreport Business News Report


Strengthening rupee stops bull run at IT counters

Mumbai: The recent bull run in technology shares may have en..

Mumbai: The recent bull run in technology shares may have ended abruptly as a reversal in the fall in the rupee against the US dollar has dimmed the prospects of the sector. The BSE IT index has declined 16 per cent since October 1, when it hit its all-time high level of 16087.82 “IT stocks had been over-owned and rupees fall from 74 to 71has led to a tailwind becoming a headwind,” said Sanjiv Bhasin, executive VP-markets and corporate affairs at IIFL.

The rupee, which had hit an alltime low of 74.4 to a dollar in October, closed at 70.7 on Thursday.

“Local funds are now using the decline in oil prices and rupee to invest in financials. They are doing this by selling defensives like IT, which had been rallying for the past few months,” said Bhasin.

Infosys, which had gained 41 per cent in the first-nine months of calendar year 2018, has fallen nearly 17 per cent since October 1. Tata Consultancy Services has fallen 19.5 per cent after gaining over 64 per cent in the January-September period. Similarly, shares of HCL Tech, Mindtree, Wipro and Tech Mahindra have fallen 7-23 per cent since October 1.

Overall, the recent weeks have not been good for companies in the technology space, with FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google parent Alphabet) taking a beating in the US, following disappointing earnings and mixed forecasts. While the fall in US tech stocks and software exporters is unrelated, analysts believe that further appreciation will sour sentiment further for the domestic software exporters.

Pankaj Pandey, head of research at retail broking firm ICICIdirect, said he views the recent correction in the IT space as a normal phase following several months of outperformance and it is not a reversal in the positive trend.

“IT was the best performer in the last 12 months. Most of the positives have already been factored in,” said Pandey.

Analysts believe that the market is likely to see more volatility in the run-up to the general elections, which is scheduled in the first half of 2019. The months ahead may see investors flocking to the defensive space again, which bodes well for the information technology stocks.

Original Article


ET Markets


You May Also Like


Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae.


Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.


Enlarge/ You wouldn't really want to use Nvidia's ..


Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora.

%d bloggers like this: