IT shares such as Wipro Ltd, TCS and Infosys have plunged up to 38% in a year as rising interest rates globally, economic slowdown and the ongoing Russia-Ukraine war took a toll on the spending of Indian IT firms. While shares of Wipro have plunged 38% in a year, Infosys stock has lost 22.29% during the period. Stock of another IT behemoth TCS is down 14.23% in a year.
The ongoing Russia-Ukraine war has dimmed the prospects of business activities across the world, including the US and Europe.
“The crisis in Ukraine, the energy crisis, and a possible recession are heightening uncertainties & weakening the global macro-economic phenomena, which will impact clients,” said KRChoksey.
Indian IT firms derive a major chunk of their revenue from the US and Europe. On the index front, BSE IT index has lost 21% and Nifty IT is down 19.81% in a year. On a year-to-date basis, the Nifty IT index has declined 25.67% and BSE IT has fallen 24.45% in a year.
The Wipro stock has fallen after four days of gain today. It is trading 3.32% away from the 52-week low of Rs 355 hit on March 29, 2023. In the current session, the IT stock hit an intraday low of Rs 365.90 against the previous close of Rs 369.70 on BSE.
Shares of IT major TCS also ended lower today. The stock fell 0.47% to Rs 3221 against the previous close of Rs 3236.80 on BSE. It hit an intraday low of Rs 3216.
Infosys stock too ended in the red today. The IT stock ended 0.09% lower at Rs 1422 on BSE. The stock has fallen 5.74% this year. It hit an intraday low of Rs 1410.50.
On the prospects of the Wipro stock, Abhijeet from Tips2trades said, “Wipro looks bearish on the Daily charts with strong resistance at Rs 373. A close above this level could lead to targets of Rs 390- Rs 404 in the near term. Support will be at Rs 360.”
On the outlook of TCS stock, Abhijeet said, “TCS looks sideways to bearish on the Daily charts with strong resistance at Rs 3265. A daily close above this level could lead to targets of Rs 3350-3550 in the near term. Support will be at Rs 3139.”
Motilal Oswal has a buy call on the TCS stock with a target price of Rs 3810.
“We expect a dollar revenue CAGR of 11% and an INR EPS CAGR of 16% over FY23-25. Our target price of Rs 3,810 implies 24 times FY25E EPS, with a 20% upside potential. We have a BUY rating on the stock and would recommend adding to the name on any near-term weakness due to this news,” said Motilal Oswal on March 17.
HDFC Securities has a buy call on Infosys stock with a target of Rs 1815.
Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “At the current stage, Infy has made a bullish AB=CD pattern with a potential reversal zone of Rs 1,377-1400 levels which are looking lucrative. Thus, we advised to ‘go long’ in this stock at the current market price with an upside target of Rs 1,480 while keeping a stop-loss placed at Rs 1,360 on a daily close basis.”
Sumit Pokharna, Research Analyst and Vice-President at Kotak Securities said, “Investors are closely focusing on upcoming IT sector quarterly results. They are waiting to listen to the company’s guidance for FY2024E, demand and margin outlook, deal wins, deal pipeline, cost take-outs, etc. We believe Infosys is better placed in the Tier-I IT services company. Infosys’ business is well-positioned in the current demand environment. Infosys can drive both modernisation and cost-efficiency focus for enterprises. The portfolio of services is well aligned with clients’ spending priorities in the tech upgrade cycle with lower legacy drag. A robust client base, strong digital capabilities and excellent large-deal capability with the ability to cater to multiple cost take-out themes will help Infosys gain share. We expect its earnings to grow by 15 per cent in FY24E and 15.90 per cent in FY25E. We have a ‘Buy’ recommendation for Infosys.”
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