FIIs turn bullish on IT stocks amid weak rupee
Foreign investors have increased their stake in IT companies in the April-June quarter this year, amid depreciating rupee against the dollar.
New Delhi: Foreign investors have increased their stake in IT companies in the April-June quarter this year, amid depreciating rupee against the dollar.
According to an analysis of ten listed IT companies, nine companies witnessed increase in their foreign institutional investor (FII) holdings during the April-June quarter of this year over the same period last year.
Only HCL Technologies saw FII holding falling during the period under review.
"The rupee depreciation has prompted institutions to increase their holdings in IT stocks," Geojit BNP Paribas Research Head Alex Matthews said.
IT companies benefit from a weaker rupee as they earn over half of revenues from the US and Europe.
"Drop in rupee value against the dollar has led to hike in FIIs' stake in IT companies as this adds to their profitability. Also, expectations of growth in the US economy is building up foreign investors faith in Indian IT companies as they have a major business interest in the American market," CNI Research CMD Kishore Ostwal said.
FIIs increased their holding in Infosys from 36.88 percent in June 2011 to 37.89 percent in the same month this year.
In TCS, FII stake surged to 14.63 percent from 12.8 percent in June quarter last year.
In addition, foreign fund stake in Wipro rose from 5.37 percent to 6.59 percent. Besides, Tech Mahindra has seen a jump of overseas investor’s stake to 5.92 percent from 3.96 percent.
Hexaware Technologies saw FII holding increasing to 43.38 percent from 40.24 percent and the exposure in Mphasis grew to 22.03 percent from 20.36 percent in June 2011.
In Oracle Financial Services Software, the exposure jumped to 3.4 percent from 2.66 percent.
Similarly, in Mindtree the stake went up from 19.89 percent to 21.99 percent and in Mahindra Satyam the holding rose to 22.31 percent from 12.95 percent.
However, in HCL Tech, the FII stake fell from 21.35 percent to 19.97 percent in June this year.
The rupee has fallen over 25 percent over the last one year.
FII investment in the equity market stands at Rs 57,060 crore so far this year and Rs 24,109 crore in the debt market during the same period.