Indian rupee plunging in the last one month from Rs 75 to Rs 69 against the dollar, the government has heaved a sigh of relief.

The recent drop in oil prices from $80 to below $60 a barrel, may have saved the country at least USD 30 billion in oil bills.

But the Indian IT and software company stocks got snubbed by traders in the last few weeks.

The snub is more short term in nature, as a weaker rupee is beneficial to IT and software companies.

Since these IT companies get money in dollars, a weaker rupee suits their balance sheet immensely. As in the US, the much touted five IT companies, like Facebook, Apple, Amazon, Netflix and Google have been labelled as FAANG stocks.

We feel that India’s best and largest IT companies such as HCL Tech, Infosys and TCS (not necessarily in the order of revenue and profitability) should conceivably be called HIT stocks.

Over the last many years, investors have made lots of money by investing in these three HIT stocks, as they have delivered exceptional returns and have outperformed the broader benchmark indices, the Nifty by a wider margin.

And if you think that you don’t own these three HIT stocks, the truth is you do, if you own any equity/hybrid mutual fund.

Looking at the assets of virtually every big mutual fund, you will find exposure to at least some of the three HIT stocks.

The year 2018 has been very good for the Nifty IT index, as it was quoting at 11,665 in December 2017 and rose to 16,250 in September 2018, giving a whopping 40% absolute return in the first nine months of the current year. Though it has corrected since then, but it shows a positive divergence and can climb to levels of 15,000 in the next few months.

The Nifty IT index is poised for a pullback rally and since TCS and Infosys hold around 25% weight each in the index, we feel that investors looking at short or medium term investment can consider buying both TCS and Infosys stocks for smart gains in the next one year. The three IT heavyweight stocks or HIT stocks have shrugged the rupee blues and should carry on with what they do best.

That is, make money for investors. Buy the three HIT stocks for super gains.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

 

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