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IT index rallies 2.5% in a falling market; Infosys, FTIL, TCS top gainers
  MUMBAI: Looking at the grim macro economic situation, investors are busy churning their funds in defensive stocks which are likely to benefit from the rupee-dollar equation.

Every 1 per cent change in the rupee hits the operating profit margins by 30-40 basis points for IT companies.

The sharp fall in rupee bodes well for the IT sector. The pick-up in the US economy would also lead to IT spending, say analysts.

The rupee is has been under pressure due to dollar outflows. It is the world's worst performing currency and has fallen 11.2 per cent in August. The rupee hit an all-time low of per dollar in trade today. The partially convertible rupee was at 68.70, down 246 paise, against its previous close of 66.24.

"On an absolute basis, the market is now factoring that IT as well as the pharma space will keep on posting good numbers till the currency situation comes into probably India's favour or the rupee starts strengthening again. So there is relative degree of surety that the earnings from this table from the IT," said Devang Mehta, Senior VP & Head Equities Sales, Anand Rathi Securities.

The measures taken by the government to rein in the rupee has met little success so far. The deteriorating macro economic situation provides good investment opportunity in the IT sector.

"On the contrary the more mess up the policymaker makes on the macro front, it benefits IT companies. So it is actually very ironical, but it is true that the more mess up we make on the policy front, the IT companies become the more attractive. That is the reason we believe that the Indian IT companies will continue to provide good opportunities to the investors," said Vijai Mantri, MD & CEO, Pramerica Mutual Fund.

At 10:20 a.m.; the S&P BSE IT Index was at 7,816.23, up 187.50 points or 2.46 per cent while the S&P BSE SEnsex was at 17,533.48, down 434.60 points or 2.42 per cent.