IT stocks rebound, courtesy Fed interest rate hike

Nifty IT index surged more than 1.5 per cent in early morning trade owing to US Federal Reserve increasing interest rates only for the second time in the past decade leading to strengthening of US dollar against all major currencies.

In a sharp reaction post Fed rate hike and subsequently Fed projecting interest rate hikes in the next year led to dollar rising to a 14-month high against the basket of currencies on Thursday, December 15, 2016, thereby puncturing emerging market currencies including the Indian rupee.

At the time of writing this report USD/INR pair was trading at 67.75 depreciating by 31 paise which translates into a down tick of 0.49 per cent.  Though a 25- basis point increase was factored in by the global markets, the surprising element was the projection made by the Fed for the future rate hikes.

Direct beneficiary of rupee depreciation are the Indian IT stocks which earn majority in USD. Technology majors being supported by both dollar appreciation and cheaper valuation led to some good buying in the sector, which has been battered in the recent months.

Biggest Gainers: -

TCS- 2.7 %

Infosys- 1.6 %

HCL Tech- 1.56 %

Info Edge- 0.80 %

Tech Mahindra- 0.70 %