IT sector stocks came in the line of fire on domestic equity bourses on Thursday, as heavy inflows of foreign funds and a globally weakened dollar saw the rupee appreciating sharply. As a result, investor sentiment weakened, leading to fresh selling in most IT stocks.
Among the sectoral indices, the BSE IT index was the biggest loser, down 100.46 points?or 2.24%–to close the day at 4,390.75 points. In the last one year, the IT index has given a return of only 0.18% compared to the Sensex return of 35.01%.
On Thursday, frontline IT stocks tumbled with Infosys Technologies losing Rs 53.55, or 2.89%, to close at Rs 1,799.75. Wipro closed at Rs 433.50, down Rs 14.65 or 3.27%; TCS was down Rs 21.65, or 2.12%, at Rs 1,000.80; Satyam Computers closed lower at Rs 421.30, losing Rs 8.20, or 1.91%.
Anil Advani, head of research, SBICAP Securities, said, ?The dollar is weakening against major currencies across the world and the trend line indicates that it would further weaken in coming days. With the appreciation of the rupee, it is definite that the stock prices of IT companies will be mirroring the rupee-dollar fluctuation and will see tremendous pressure in the short term.?
Market experts feel that with real growth potential, emerging markets could potentially witness an increased flow of funds from the US, which would again drive local currencies up against the dollar. According to data released by Sebi, FIIs pumped Rs 2,484.50 crore into the domestic equity markets on Wednesday, when the Sensex gained over 4%.