IT stocks benefit from rupee fall, but for how long?

Even as a strong bear grip chokes the market the IT companies are having a party on the street and it's all being sponsored by the rupee. As the currency crashes to a shocking 68 against the dollar, sectors like oil and gas are running for cover, while export-dependent tech majors are touching lifetime highs reports CNBC-TV18's Kritika Saxena.

A look at the top stocks on the Nifty today, one will see that HCL Tech and Tata Consultancy Services (TCS) touched lifetime highs and Infosys and Wipro jumped 35 to 18 percent (year-to-date) respectively.

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But considering the overall market is under a strong bear-grip, these IT companies are up due to depreciating rupee. While the rest of the market remains spooked with the rupee's unprecedented fall, IT stocks are rallying due to the short term benefit of the INR's depreciation on their topline.

Though the next few quarters are expected to continue to show gains, experts say falling rupee will eventually lead to an overhaul in pricing structure, steep escalation in overhead costs and will force IT firms to hit the pause button on acquisition plans.

Will this impact plans of Indian companies looking to acquire overseas?

Sanjoy Sen, Senior director, Deloitte says "Yes, simply because acquiring overseas will become much more expensive and so, foreign receivables will go up.

According to Sen, historically, a lot of pricing has been in dollars, pounds or euros based on where the customer is based. "In recent years we have seen some companies expressing their contracts in rupee denominations; for them the procurement will become much cheaper but will work against the Indian companies that are providing services," he adds.

This means that companies who want to stay afloat in the long term have to innovate; by establishing pay per usage contracts in place of fixed price contracts; leveraging cloud to optimally utilise resources and create a stronger near shore presence with the client.