IT stocks rose on Wednesday as the dollar climbed higher amid a close contest between Donald Trump and Joe Biden in the 2020 US elections results.

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Early results of the US presidential election showed a very tight race between incumbent Donald Trump and his Democratic rival Joe Biden, prompting a jump in the dollar.

Former vice president and Democratic presidential candidate Joe Biden has maintained his lead mid-way through the counting of votes, as Republican incumbent Donald Trump appeared to be fast catching up.

The rupee fell to over two-month low of 74.81 per US dollar as compared to the previous close of 74.41 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.31 percent to 93.85.

The Nifty IT index rose over 2.5 percent with all the constituents trading positive. L&T Infotech, Wipro, Infosys, and TCS rose the most, up between 2 percent and 3.5 percent. Mphasis, Tech Mahindra, Mindtree, Coforge, and HCL Tech were also up 1-2 percent.

The dollar is usually weaker under Republicans resulting in the outperformance of commodities over equity and emerging markets over the US, Edelweiss Securities said in a report.

It added that that historical data has proved that Democrats fare better for the economy, with average growth 100 bps higher at 3.8 percent. However, the paradox is Republicans are perceived as being market-friendly. If ‘middling economy and low-interest rates’ are the market positives that drive up the valuations, Republicans have an upper hand, Edelweiss further stated.

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