The recent move by Infosys and followed by HCL Technologies to acquire Axon Group, UK (a consulting company) is an indication of this trend.
The rupee has been kind
The 7.3 per cent fall in the value of Indian rupee against the dollar since July 1, 2008 could not have come at a better time. A strong dollar is beneficial for exporters as it fetches them more of the local currency improving operating margins, as in the case of IT firms by about 35-40 bps (basis points; 100 bps is one percentage point).
However, for companies which have hedged their receivables, the benefits on account of rupee depreciation would be capped. Firms that have relatively lower forex hedges like Infosys and Satyam are expected to benefit the most, while HCL Technologies and Wipro could gather mark-to-market losses.
Image: Demonstrators protest the proposed $700 billion Wall Street bailout near Bowling Green Park in the Financial District in New York. | Photograph: Nicholas Roberts/AFP/Getty Images
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