The currency hit historic low of 71.37 against the US dollar today, depreciating more than 11.5 percent year-to-date.
The Indian rupee has been on downward trajectory and has not been showing any sign of rebound, which is always good thing for exporters like technology stocks. That is why when all sectoral indices are in the red dragging the market, IT stocks continued to be on buyers' radar on Tuesday.
The Nifty IT index jumped over a percent to trade at around 15,900 levels. The index already shot up 35 percent year-to-date on top of 12 percent upside in previous year, outperforming all other sectoral indices.
Mindtree, Infosys, Tech Mahindra, TCS and HCL Technologies gained 1-2 percent today while year-to-date, HCL Technologies, Infosys, KPIT Technologies, Mindtree, TCS and Tech Mahindra gained 18-80 percent.
The rupee is the major reason behind rally in technology stocks while other drivers are improving US growth, BFS (banking, financials and services) segment and strong management outlook for FY19.
The currency hit historic low of 71.37 against the US dollar today, depreciating more than 11.5 percent year-to-date.
Other reason is share buyback announced by IT companies in last one year. TCS' share buyback worth Rs 16,000 crore will begin on September 6 while HCL Technologies' Rs 4,000 crore share buyback recently got approvals from shareholders.
The fall in rupee is also beneficial for pharma companies which have exposure to the US, including Sun Pharma, Dr Reddy's Labs, Cadila Healthcare, Lupin etc.
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