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IT companies cheer Fed rate hike; stocks gain up to 17%

Stock of 3I Infotech was the top performing stock on the BSE IT index and gained Rs 5.08, up 17.25 per cent on the Bombay Stock Exchange.

BT Online   New Delhi     Last Updated: December 17, 2015  | 16:43 IST
IT companies cheer Fed rate hike; stocks gain up to 17%
While shares of mid and small-cap IT companies registered smart gains, those of largecap companies moved marginally. Photo: Reuters

Shares of IT companies surged up to 17 per cent in trade on Thursday after US Federal Reserve raised interest rates for the first time in nearly a decade on Wednesday, signaling faith that the US economy had largely overcome the wounds of the 2007-2009 financial crisis.

While shares of mid and small-cap IT companies such as 3I Infotech, MphasiS, Infinite Solutions and Mastek registered smart gains, those of largecap companies such as Infosys, Wipro, HCL Tech and TCS moved marginally.
 
Stock of 3I Infotech was the top performing stock on the BSE IT index and gained Rs 5.08, up 17.25 per cent on the Bombay Stock Exchange.

Scrips of MphasiS, Mastek, Firstsource Solutions and Zen Tech gained 7.57 per cent, 3 per cent, 8.5 per cent and 8.64 per cent, respectively in intraday trade.

Among largecap stocks, Infosys added 1.05 per cent to Rs 1,110. TCS ended 1.38 per cent higher at Rs 2445.75, while Tech Mahindra and Wipro gained 1.08 per cent and 0.09 per cent, respectively. HCL Tech added 1.74 per cent to Rs 863.60.

The stocks rose on hopes that volatility in the currency market may halt now that the Fed rate hike is done and dusted. A strong dollar will help IT companies contain cross-currency headwinds.

Cross Currency headwinds is a term used to indicate a possible loss in revenues due to volatility in currency cross between rupee and dollar.

The US central bank's policy-setting committee on Wednesday raised the range of its benchmark interest rate by a quarter of a percentage point to between 0.25 per cent and 0.50 per cent, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.

Meanwhile, the dollar index, which tracks the movement of dollar against a basket of six major currencies, stood at 98.80.

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