On Wednesday, IT index closed in green. The BSE IT Index closed at 4,843.47 up 0.9% with Mphasis, Satyam, Patni Computer, TCS, HCL Tech, Infosys ending strong. The reason behind the upsurge is strenghtening of the rupee. It opened at its lowest in more than two weeks on Wednesday and ended at 40.9950 per dollar vs 40.9300 on Tuesday.

The IT stocks in general have been under performing for sometime in the face of rupee getting stronger with each passing day. The rupee appreciation against the US greenback has only added the woes of the Indian IT industry which is already burdened with rising costs due to wage increases, high attrition and over-dependence on the US market for business.

Market analysts feel that with earnings round the corner, IT stocks are poised to witness more pressure on the bottomline if the rupee appreciates further against the dollar. But with rupee coming back to Rs 41 against the dollar, IT may gain its strength back.

In the past one-week Tech heavyweights have shown a subdued performance with Satyam being the biggest loser followed by Patni Computers and Infosys.

The fall in IT scrips have been primarily on account of massive rupee appreciation. The rupee has appreciated from Rs 44.29 to a dollar in beginning of January to Rs 40.75 in June, which means an appreciation of 8%, which in turn led to a correction in IT stocks. "Considering that a one per cent appreciation in rupee reduces margins by 30-40 basis points, an 8 % rise can have a margin impact of 2-4 %," added a senior research analyst.

Jagdish Malkani, a member of NSE is little surprised that IT has not been stronger with rupee depreciating. "May be, the market wants to wait and watch a few more sessions. If the feeling is that the dollars have flowed in for the big IPOs and for a while the rupee will wobble again, then some contrarian play could come in,” he said.

Experts believe that some of the fundamentals are likely to be in place with the first quarter results. However most remain cautious and optimistic on the market and feel that we are likely to see some amount of action in select few stocks, which are going to continue with good guidance and performance in Q1. "We expect some amount of direction call from the IT segment, which is supposed to be somewhat positive, compared to the contrarian expectations in the market,” adds Deven Choksey of KR Choksey Securities.