The Dollar's strong performance in the past two weeks may have made the Indian Rupee weaker, but amid escalating trade and tariff based concerns, this strengthening is a sunshine for the Indian technology industry.
On Wednesday, the Rupee slipped by as much as 19 paise in early trade, quoting Rs 68.43 per US Dollar. This is the most weakest that the Rupee has slumped in 19 months.
No soon did the Rupee weaken that tech stocks, trading on the National Stock Exchange and Bombay Stock exchange, rallied by notches. Nifty IT index was up by 1.16%, while sectoral indices on BSE were up by 0.95% (BSE Information Technology) and 0.79% (BSE TECK).
Stocks of Tech Mahindra (up by 2.85%), TCS (up by 1.16%), Infosys (up by 0.90%), and Oracle Financial Services(up by 0.26%) were trading in the green on the BSE.
There is an expectation that a few of these technology stocks could hit a fresh high, with hopes that USD-INR rates may find support at lower levels. ICICI Direct in a note hoped that USD-INR could find support at lower levels. "Utilise downsides in the pair to initiate long positions," added the brokerage house.
Only IT stocks and FCMG (up by 0.03%) have managed to post positive numbers on the bourses. Sectoral indices on the BSE such as Industrials, Utilities, Capital Goods, and Oil & Gas have accounted for more than 1% loss in the trading session so far.
Rushabh Maru, Research Analyst from Anand Rathi commodities explained in a note that the rupee depreciated owing to combination of domestic and global factors.
He said, "Now the 68.86 (USDINR spot) is the key level to watch out for the rupee. We expect the RBI may intervene aggressively around 68.80 - 68.85 levels to defend the currency. But if 68.86 level is taken out then we may see sharp depreciation in the rupee in coming sessions and it may move towards 70.00 - 70.50 levels immediately."
"Rising crude oil prices, trade war concerns, strength in the dollar index and weakness in the emerging market currencies are key factors for the rupee depreciation. Steady capital outflows and worsening domestic macroeconomic fundamentals are also key factors for the rupee depreciation. Exporters are reluctant to hedge their exposure in the current market as the rupee is weakening every day. On the other hand, 68.00 levels is very good support for the USDINR. We are seeing importers buying on every dip in the USDINR," he explained.
This on a trading session which has been marginally in the red. The BSE Sensex was trading marginally in the red by 0.20% or down by 72.25 points.
Here are the snapshots from the NSE Nifty IT index
The movers and shakers on the BSE Information Technology index
The leaders on the BSE Teck index.