Rupee hits new record low: TCS, Coforge, Tech Mahindra; here's how IT stocks are faring on Friday

IT stocks were swinging between gains and losses during the intraday session on Friday, December 12, as the rupee hit a fresh record low as uncertainty over the India-US trade deal and persistent foreign fund outflows dented investors' sentiments.

In the late afternoon session, Nifty IT was trading 0.18% up at 38,166. After opening at the 38,203.85 level, the index gained 0.30% to an intraday high of 38,212.75, while it slipped 0.51% to its day’s low of 37,901.75.

Tata Consultancy Services (0.68%) was the biggest gainer on the index, followed by Persistent Systems (0.66%), Tech Mahindra (0.4%), Wipro (0.39%) and Mphasis (0.37%).

On the other hand, Oracle Financial Services Software (-0.57%), Coforge (-0.33%), Infosys (-0.24%), LTIMindtree (-0.14%) and HCL Technologies (-0.12%) were the laggards on the index.

Meanwhile, led by Vodafone Idea (3.11%), Tata Consumer Products (1.3%), Hexaware Technologies (1.06%), and Indus Tower (0.89%), the Nifty Midsmall IT & Telecom index was trading 0.48% higher.

How weak rupee helps IT companies

A weaker rupee in comparison to the US dollar augurs well for IT companies, as they earn a significant amount of revenue in dollars, and a weaker rupee will lead to higher revenue for IT companies in the upcoming quarter.

IT companies generally earn 60–75% of their revenue in US dollars. Meanwhile, most of the expenses of the IT companies are in rupees, and when the dollar results in largely the same stable costs, it results in higher profit margins for the IT companies, analysts noted.

A weaker rupee also allows Indian IT firms to reduce pricing slightly in dollar terms, making them attractive for gaining new orders from potential and existing clients, analysts added.

Rupee on Friday

The rupee depreciated 24 paise to a new record low of 90.56 against the US dollar in early trade on Friday.

Forex traders told news agency PTI that the currency is under pressure largely due to aggressive dollar purchases from importers amid surging global prices for precious metals.

At the interbank foreign exchange, the rupee opened at 90.43 against the US dollar, then fell further to 90.56 against the greenback, registering a fall of 24 paise from its previous close.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02% higher at 98.37.

Brent crude, the global oil benchmark, was trading higher by 0.67% at $61.69 per barrel in futures trade.