Markets At Record High: TCS, HCL Lose Sheen, Down On Strong Rupee

NEW DELHI: The S&P BSE Sensex surged over 100 points in trade to hit its fresh record high on Wednesday, but technology stocks remain muted on strong rupee.

The Indian currency strengthened to its highest level in eight months, helped by hopes of continued foreign fund inflows while gains in other Asian currencies also underpinned sentiment.

At a time when most of the sectoral indices on the Bombay Stock Exchange are showing handsome gains, BSE IT index was trading flat with negative bias.

At 09:45 a.m.; S&P BSE IT index was trading 0.04 per cent lower as compared to 0.5 per cent gain seen in the BSE Sensex. The S&P BSE Sensex rose 116 points to hit its fresh record high of 22,172.10.

Tata Consultancy Services was trading 1.01 per cent lower at Rs 2124.95. It hit a low of Rs 2119.10 and a high of Rs 2154.60 in trade today.

Infosys was which trading lower, managed to bounce back and was trading 0.4 per cent higher at Rs 3265. It hit a low of Rs 3232 and a high of Rs 3271.50 in trade today.

HCL Technologies was trading 0.1 per cent lower at Rs 1395.05 and MindTree was down 0.5 per cent to Rs 1370.

From the high of 68.80 USD-INR had fallen down sharply. Since the last several weeks it has been trading in a sideways to bearish manner.

The partially convertible rupee trading at 60.18/19 per dollar at 0336 GMT compared with its close of 60.48/49 on Tuesday and after hitting 60.17, its highest since July 30, Reuters reported.

"In the immediate short-term rupee is appreciating and that is bringing in some sort of negative implication on earnings of IT stocks for FY15 going forward because remember third quarter realisation on US dollar was closer to around 61-62 and fourth quarter you are also going to see that sort of a realisation," said Manish Sonthalia, Motilal Oswal AMC-PMS.

"But, if we move into FY15 and rupee appreciates beyond let us say at Rs 60 you are looking at 5% to 7% down grade in EPS on all the major IT companies that is what the markets are reacting to," he added.

However, Sonthalia feels that we could have a sentimental appreciation of the rupee because of elections but the natural trajectory for the rupee is down 4% to 5% depreciation is what you would assume so I would think that any fall in IT and pharma stocks are good levels to buy and build on to your positions.

In terms of the price pattern, USD-INR seems to have formed a large ending diagonal pattern. It is currently trading near the lower end of the pattern, say experts.

“A key support zone is 60.20–59.50, where there are a couple of medium-term rising trend lines. Unless these supports are broken on a closing basis, the price can attempt a bounce,” Sharekhan said in a note.