New Delhi: The rupee declining against the US dollar will help domestic IT companies in the next 2-3 months, HCL chairman Shiv Nadar said on Wednesday.
“It (the decline of rupee vs US dollar) is good for us. The impact will depend on how the decline continues, but it is good for Indian IT firms,” Nadar said on the sidelines of an event here.
The Indian currency slumped to its two-year low of 48.01 on Wednesday in early trade at the Interbank Foreign Exchange (Forex) market before closing 47.64/65 against US currency.
Like exporters, IT companies earn majority of their revenue in dollars. Depreciating rupee means exporters get more rupee per US dollar.
However, most big IT firms also hedge against strong cross-currency fluctuations.
IT stocks have also rallied on Wednesday.
Led by Infosys, IT stocks surged by up to 6% on the BSE, after rupee declined further to 48-level against the US dollar. Infosys settled 5.78% higher, while country’s biggest software exporter TCS jumped 2.24%.
“Depreciating rupee means a better earnings growth for the IT companies,” Inventure Growth and Securities head equity Amit Chheda said.
Other IT companies such as Wipro climbed 4.34%, HCL Tech surged 4.25% and Mphasis rose by 1.94%.
Led by gains in the bellwether stocks, the BSE IT index ended 4.27% higher at 5,039.74.
Analysts said large IT companies benefit by weakness in the rupee as it helps in improving their profit margins.