With global oil prices surging to their highest levels in 6-months weakening the rupee against the US dollar, investors are making use of this opportunity by lapping up export-oriented IT stocks.
As a consequence, the Nifty IT index hits its highest level in a year (52-week high) on Wednesday.
Investors have turned bullish on export-oriented IT stocks following the rupee's depreciation against the US dollar. The rupee is anticipated to slip further owing to the high oil prices which have given investor sentiments a lift in the near term.
The Nifty IT index opened on Wednesday at 16,182.90, hitting an intra-day, as well as a 52-week, high of 16,405.80 before finishing the day slightly lower at 16,370.35.
Index constituents HCL Tech and Wipro stocks touched their respective 52-week highs of Rs 1,142.10 and Rs 294.30. Tech Mahindra and Infosys, however, fell marginally short of their previous highs.
Tech Mahindra logged an intra-day high of Rs 820 per share, Rs 20 below its 52-week high of Rs 840. Infosys hit the intra-day high of Rs 737.90, just Rs 35 short of its 52-week high of Rs 773 a share.
On the oil front, the price of UK Brent crossed $74 a barrel earlier in the week, after the US announced that it would end the earlier waiver on the Iran sanctions for 8 countries, including India and China, allowing them to buy Iranian oil. The waiver is due to end on May 2.
A Care Ratings report on Wednesday said that "the (Indian) currency will be the first point of contact as the trade deficit and current account deficit will widen" since India imports over 80 per cent of its oil requirements.
"The sharp increase in import bill will hence tend to put pressure on the rupee," the report said.
It also noted that the rupee will be under pressure and a sustained increase in oil price in the range of $70-75 per barrel or higher can move the rupee down by 3-4 per cent on an annual basis, given that the dollar has already started strengthening in the world market.
(Ravi Dutta Mishra can be reached at ravidutta.m@ians.in)
--IANS
ravi/sn/bc
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)