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In 2007 it was considered to be the end of the euphoric times that the Indian IT sector has been getting

used to — and all because of the relentless appreciation of the rupee against major currencies. The Indian IT sector earns four out of every five rupees from overseas clients and that most IT exporters’ margins are being squeezed on account of stronger home currency. IT companies in India have traditionally looked westward for business. This was probably because the domestic market appears to be a tiny dot compared to the larger opportunities globally. Nasscom estimates the global IT market for Indian IT companies to be $45 billion. Taking a closer look at all those companies that generate sizeable revenue by serving the domestic market. These companies run operations in India profitably. They are shielded from the currency fluctuations to a great extent as only a small portion of their income is earned in foreign currency. Tulip IT Services, CMC, NIIT and Spanco are among them. While Tulip earns all of its revenue domestically, the others generate more than threefourth of their total income from India. Larger firms like Ramco Systems and Rolta India have about two-third of revenue coming from the domestic clients. In 2008 the rupee has gained more than 9 percent against the dollar since the start of the year, and touched a nine-year high of 40.28 rupees per dollar in late May. Its surge triggered complaints from small and medium-sized exporters, which account for 45 percent of the country's export Ambit Capital has come out with report on rupee appreciation impact on IT sector. They say every one percent Rupee appreciation could hit IT sector EBITDA margins by 4060bps or 0.4 - 0.6%.

PERFORMANCE OF SOME OF THE IT COMPANIES DURING JAN’07 to JUN’07(the rupee appreciation period):
The share price of IT stocks such as Tata Consultancy Services, Infosys, Wipro and Satyam Computer Services have slumped between 7 per cent and 14 per cent since early-January.

The share price of the country's largest software exporter, TCS, has fallen by over 8 per cent on the BSE. TCS shares fell from early January level of Rs 1,248.5 to close at Rs 1,145.80 on June 20.

INFOSYS lost almost 14 percent on BSE. Infosys dropped from Rs 2,272.45 in January to Rs 1,954.10 in June.

While WIPRO lost about 14.6 percent on BSE on account of the rupee appreciation. Wipro saw the maximum drop, quoted at Rs 521.75 on June,21 against the January-level of Rs 611.50 on the BSE.

SATYAM Computer Service slipped 7.18 per cent. It dropped from its levels of Rs 628.40 in January to the levels of Rs 523 in June.

Out of all the big players that we have in our IT sectors the only company that posted a growth during consistently in consecutive quarters and in this period of rupee appreciation was HCL. It rose about 5.7 per cent during this period. The market realizes that the company's strategy to play in uncontested space is working.