Can Infosys shares slip below Rs 1,200? What technical analysts said as it hit fresh one-year low

Infosys shares have plunged around 20 per cent so far this year. The drop is quite sharp compared to a nearly 2 per cent decline in the 30-share BSE Sensex pack. The country's second-largest IT major's stock slipped to a fresh 52-week low of Rs 1,218.05 on Monday. It eventually settled 0.09 per cent lower at Rs 1,226.30 yesterday over a previous close of Rs 1,227.45. The fresh weakness came despite a 0.71 per cent climb in the Nifty IT index.

Infosys posted a disappointing quarterly report, highlighting worries for the IT sector which earns more than 25 per cent of its revenue from the US and European banking, financial, services and insurance (BFSI) sectors. The Bengaluru-based company's net profit stood at Rs 6,128 crore in the January-March quarter (Q4 FY23).

On the technical front, support on the counter could be seen at Rs 1,200, technical analysts said. One analyst said that the stock looked weak for the time being, while another suggested that investors should be in wait-and-watch mode at the current levels.

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Sneha Seth, Derivatives Research Analyst at Angel One, said, "Infosys has been under pressure and the overall technical chart structure looks weak for the time being. As far as levels are concerned, Rs 1,200-1,180 remains immediate support zones; whereas Rs 1,270, followed by Rs 1,350 levels are likely to act as hurdles."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "The counter has seen a massive beating on April 17, 2023, due to weak Q4 numbers. At present, it has taken support near Rs 1,200 level which is also its historical support. Moreover, it is trying to make a classic hammer structure near the support level of Rs 1,200. For the coming few days, one needs to see whether it holds Rs 1,200. If it sustains above it, then we may see Rs 1,350. As of now wait and watch."

Infosys 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 23.34. 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 21.86. It has a price-to-book (P/B) value of 7.51.

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That said, Infy has an average target price of Rs 1,590.38, Trendlyne data showed, suggesting a potential upside of 29.69 per cent. The scrip has a one-year beta of 1.23, indicating high volatility.

In a separate development, the IT major has signed a memorandum of understanding (MoU) with energy and chemicals company Aramco to accelerate human resource (HR) technology.

Infosys and Aramco aspire to bring new insights to HR data and analytics, scale the use of automation tools, and enhance employee experience through artificial intelligence (AI) technologies, the tech company stated in an exchange filing.

Meanwhile, Indian equity benchmarks rose sharply in the previous session amid a fluctuating trade, led by gains in banks, financials, consumers and technology stocks.

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