IT stocks in limelight as rupee hits new low

Written by Markets Bureau | Mumbai, May 14 | Updated: May 16 2008, 04:46am hrs
The depreciating rupee against the US greenback gave a fillip to IT stocks, which witnessed a rally on the bourses on Wednesday.

The Indian currency saw an intra-day low of Rs 42.67 against the dollar, giving the much-needed boost to the IT stocks which passed through a grim phase last year, consequently leading key Indian equity indices to end in positive terrain.

Among the sectoral indices, sustained buying in IT stocks led the BSE IT Index, which closed at 4,427.36, gaining 3.8% or 162 points mainly contributed by heavyweights such as TCS which jumped by 7.09%, Infosys, i-Flex Solutions and HCL Technologies, which surged by around 4.5% each.

The head of research of a leading domestic brokerage firm said, "The rupee has slid for the third consecutive session in the week and it is expected to fall further due to persistent dollar demand from oil companies and virtually no inflows from the foreign players. On the back of this, stock prices of Indian IT companies have surge in the past few sessions giving positive cues to the small and medium IT and technology stocks. However, we also saw some intra-day short covering at lower levels in few IT giants such as Infosys and TCS."

Meanwhile, the benchmark Sensex of the Bombay Stock Exchange (BSE) touched the psychological 17K-mark during intra-day trade and closed at 16,978.35 points. It added 225.49 points or 1.35% while the Nifty of the National Stock Exchange (NSE) surged 53.95 points or 1.09% to close above the 5K-mark at 5,011.75 points.

Also, news of price cut by Rs 4,000 per tonne by second-rung steel manufacturers such as Bhushan Steel, Uttam Galva, which will maintain prices for three months, helped the metal stocks to outperform the Sensex.

The BSE Metal Index surged 4.36% or 687.30 points to settle at 16,435.18. Major gainers for the day included Hindustan Zinc which surged 17%, Hindalco rallied by 7%, Jindal Steel up 6%, Sterlite gained 4.7%, Sesa Goa up 4.4% and Tata Steel ended 4% higher.

Though the markets posted good results on Wednesday, overall participation remained bleak with trading volumes dipping to 88.61 crore shares from 102.07 crore shares on Tuesday.