TCS, Wipro, Infosys soar as rupee weakens on Fed outlook
IT stocks staged a strong rebound on Thursday and are on track to snap a four-session losing streak that led to more than 7 per cent drop in the BSE IT benchmark. The IT index on the BSE traded 2.4 per cent higher as of 01.25 p.m., outperforming the broader Sensex, which traded 0.23 per cent lower.
On the Nifty, TCS was the top gainer, up 3.4 per cent, while Wipro and Infosys advanced more than 2 per cent each. HCL Tech shares traded 1.3 per cent higher.
IT stocks had come under sharp selling pressure after two of India's biggest outsourcers - Infosys and TCS - forecast weak revenue growth in the March quarter. Recent gains in the rupee also weighed on sentiments as IT companies earn a major part of their revenues in dollars.
However, US Federal Reserve's hawkish outlook on interest rates led to a strengthening of the greenback. The dollar traded at two-week highs against a basket of major currencies early on Thursday, having posted solid gains after comments from Fed Chair Janet Yellen prompted markets to bring forward interest rate hike expectations.
Market analyst Sanjeev Bhasin told NDTV that higher yields on US bonds because of strengthening of the dollar may lead to redemption of money from emerging market bonds, currencies & equities as cost of leverage will rise.
The rupee slipped to one-week low of 61.40 in trade today on concerns over redemption by foreign funds, who have been the key driver of rupee. FIIs have invested a total of $3.6 billion in bonds and equities in March.
Analysts said the recent selloff in IT stocks presents good buying opportunity. Shashi Bhusan of Prabhudas Lilladher told NDTV that the demand for IT services continues to be strong. His top picks included Infosys and Wipro. In midcaps, the correction in Mindtree and Persistent Systems makes them good buys, he added.
Polaris Financial Technology rose as much as 11 per cent extending its gains to over 50 per cent in 3 days ever since after the software services firm said its board had approved a split of the company into two businesses.
Market analyst Sarvendra Srivastava's top trading bets includes Polaris on which he has a target of Rs. 215 on Polaris and stop-loss of Rs. 194.4
(With inputs from Reuters)