Shares of Tata Consultancy Services Ltd (TCS) on Tuesday fell for the ninth straight session. The stock slipped below the Rs 3,100 level in intraday deals before settling a bit higher. The scrip today closed 1.12 per cent lower at Rs 3,105.90. TCS has plunged 8.66 per cent in the past one month and 4.75 per cent in 2023 so far.
At today’s closing level of Rs 3,105.90, the stock traded 6.15 per cent higher than its 52-week low of Rs 2,926, hit on September 26 last year. Yet, the counter has lost 19.02 per cent compared to its one-year high level of Rs 3,835.50, touched on April 5, 2022.
Around 34,000 shares changed hands today on BSE, which was lower than the two-week average volume of 1.03 lakh shares. Turnover on the counter stood at Rs 10.68 crore, commanding a market capitalisation (m-cap) of Rs 11,36,464.77 crore.
Analysts largely suggested that the stock looked ‘bearish’ and may decline further in the near term.
Ganesh Dongre, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “We may see further selling in this stock toward the Rs 2,900 level. Traders are advised to avoid taking long positions at this level and can wait for the next support level which is at Rs 2,900-2,800.”
Ravi Singhal, CEO, GCL, said, “TCS looks very weak on technical charts amid the fallout of banks in the US and Europe. There are concerns that banks there could cut IT spend on digital infrastructure, which may impact the domestic IT firms.” For TCS, this analyst has revised downward the target price to Rs 2,700. He advised traders to keep a stop loss at Rs 3,270.
Ravi Singh, Vice-President and Head of Research at Share India, said, “The stock is showing weakness on the daily charts and the momentum indicators are suggesting a strong bearish trend ahead. TCS may touch the levels of Rs 2,950 in the coming weeks.
AR Ramachandran from Tips2trades said, “TCS looks bearish but also is oversold on the daily charts with strong support now at Rs 3,071. Investors can buy from a long-term perspective only if the daily close is above its resistance level of Rs 3,170. Targets will be Rs 3,370-3,509.”
The stock traded lower than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 25.90. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a price-to-equity (P/E) ratio of 29.40.
The scrip has an average target price of Rs 3,693.87, Trendlyne data showed, suggesting a potential upside of 18.92 per cent. It has a one-year beta of 1, indicating average volatility on the counter.
The banking sector crisis in the West has turned analysts cautious on IT stocks, as banking and financial services (BFS) clients look to curtail discretionary tech spending in the first half of FY24 in the aftermath of Silvergate, Silicon Valley Bank and Signature Bank bankruptcies in the US and merger of Credit Suisse with UBS in Europe.
In addition, a sudden change in the company’s leadership also weighed on investor sentiment. TCS CEO Rajesh Gopinathan has tendered his resignation to pursue other interests. The software giant has named K Krithivasan as CEO-designate and said he would take over as chief executive and managing director in the next financial year.
Meanwhile, Indian equity benchmarks closed with decent gains, led by strong buying interest in banks, financials, consumer durables and energy stocks.
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