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Infosys, TCS, Wipro shares recover from 52-week lows; what should investors do?

Infosys, TCS, Wipro shares recover from 52-week lows; what should investors do?

Infosys, TCS, Wipro share price today: While Infosys has recovered 20%, stock of Wipro has risen 8.33% from its 52 week low. Shares of TCS too have climbed 15.58% from their yearly low

Infosys, TCS, Wipro share price today: The recovery in IT stocks comes on the back of slowing down of interest rate hike cycle in the US Infosys, TCS, Wipro share price today: The recovery in IT stocks comes on the back of slowing down of interest rate hike cycle in the US

Shares of IT majors Infosys, Wipro and TCS have recovered up to 20% from their 52-week lows with the equity market erasing losses during the last two months. While Infosys has recovered 20%, stock of Wipro has risen 8.33% from its 52 week low. Shares of TCS too have climbed 15.58% from their yearly low.  The recovery in IT stocks comes on the back of slowing down of interest rate hike cycle in the US. The three IT majors cater to clients worldwide and relief on interest rate hike front in the US sparked a rally in the IT stocks.

While Infosys shares touched their 52-week low of Rs 1,355.50 on September 26,stock of Wipro hit its 52-week low of Rs 372.40 on  October 17. Similarly, shares of TCS reached a 52-week low of Rs 2,926 on September 26.

Other major indices too have recovered since September end. Sensex has risen 5,556 points or 9.72% since September 26. BSE IT index too surged 3,158 points or 11.62% during the period.

In today’s trade, the three IT shares were trading on a mixed note.

Wipro stock fell 0.52% intraday to Rs 403.10 against the previous close of Rs 405.20. Wipro shares have declined 43.6 per cent this year and fallen 36% in the last one year.

Shares of Infosys too were trading on a flat note today. The IT stock fell 0.76% to Rs 1616 on BSE. Infosys stock has declined 14.43 per cent this year and fallen 5.68% in the last one year.

On other hand, shares of TCS gained 0.14% to Rs 3,401 in late morning deals today. The stock has declined 8.92 per cent this year and fallen 3.63% in the last one year. The BSE IT index fell 63 points to 30,376 in the current session.

Also Read: Infosys, Wipro, TechM onboarding delay: Former HCL Tech CEO Vineet Nayar says this has happened before

With Sensex and Nifty have been hitting fresh all-time highs this week, here’s a look how this rally in the market can impact IT stocks.

Abhijeet from Tips2Trade said, "A strong recovery in global IT stocks due to lower inflation and thereby an expected halt in interest rate hikes has led to a rally in IT stocks in India including Wipro. A daily close above Rs 406 could lead to a further uptrend till 416-420. Strong support is now seen at 389. After a sustained decline since the last six months due to overstretched valuations coupled with recession fears, IT stocks in India including TCS & Infosys have recovered well from their recent lows. TCS faces major resistance at Rs 3420 and investors are advised to book profits at current levels and wait for a dip near Rs 3250- Rs 3255 to re-enter for higher targets of Rs 3625- Rs 3690. Similarly, Infosys faces massive resistance at Rs 1631. Investors should book profits and wait for lower levels near Rs 1546- Rs 1550 to buy for targets of Rs 1728- Rs 1760 in the near term."

Also Read: IT industry to recruit at least 2 lakh people in near term: Infosys co-founder Kris Gopalakrishnan

 Analysts on Wipro stock 

Manoj Dalmia, founder and director, Proficient Equities said, “Wipro stock made a high of Rs 700 and now is available at almost half rate at about  Rs 404. The selling seems to have slowed down and the stock may remain sideways for a while till a range of Rs 454. Any closing above this can create an upmove. Long-term investors can start accumulating considering its strong fundamentals and order book pipeline with a long-term target of Rs 719 which was the 52-week high.”

Ravi Singhal, CEO, GCL said, “As we can see from the Nifty IT index, after the Nifty made a new high, Wipro is one of the weakest large cap stocks in IT. We believe this is a dead cat bounce, but it can touch 455 in this bounce.”

Ravi Singh, Vice President and head of research, Share India said, “Wipro share price is showing lower levels buying after the company launched a strategic cybersecurity consulting offering in Europe which comes on the heels of a series of acquisitions in the consulting space. The same is considered a part of the firm’s vision to build a global cybersecurity consulting. The move in the counter may continue to the  Rs 420 levels in near term.”

Also Read: After TCS, now Infosys to resume WFO in a phased manner

Infosys stock

Shares of Infosys may breach the level of Rs 1900 in the long term.

Ravi Singh, vice President and head of research, Share India said, “Infosys is currently witnessing lower levels buying and short coverings taking cues from rupee weakness and recovery in benchmark indices. The technical formation in the stock and the momentum oscillators suggests a strong move ahead. The momentum may push the Infosys stock to higher levels of Rs 1680 in coming trading sessions.”

Manoj Dalmia, founder and director, Proficient Equities said, “Infosys saw some buying action in the last few weeks. The price may halt at current levels for a week or so and can go up towards the peak of Rs 1939. Investors can buy this fundamentally strong stock with a long-term perspective.”

TCS

The IT stock can go up to Rs 4,000 in the long term.

Ravi Singh, Vice President and head of research, Share India said, “TCS is India's leading company providing IT services whose organic revenue growth remains strong and the company has the best margin in the industry. The company is almost debt free. Its ROE is good and the company also pays a dividend of 56.35 per cent. On the technical setup also, TCS share price may witness more strength to pull the stock towards the levels of Rs 3550 in the near term.”

Manoj Dalmia, founder and director, Proficient Equities said, “TCS saw some buying recently. We can expect some consolidation taking place in the range of Rs 3000-3300. This fundamentally strong stock can be bought at these levels with a target of Rs 4000 on the upside with a long-term perspective.”

Commenting on the outlook of IT stocks, Apurva Sheth, Head of Market Perspective & Research, Samco Securities said, “We have been bullish on IT sector stocks Since October 2022. There are early signs that attrition in the IT sector has peaked out. The new hiring across the companies/sectors have begun and margins have started expanding gradually. Entry at the current level in the top rung IT stocks may reward the investors handsomely going ahead. The frontline IT stocks have much more strength on management of the supply side, which is talent management, which is a big issue at this moment. At the same time, we are bullish on niche IT players which are specialist in ER&D plays etc. These are the sub-segments of IT space we are bullish."

Mohit Nigam, Fund Manager & Head - PMS, Hem Securities said, "The Nifty IT index had corrected almost 30% from its high due to various challenges such as margin reduction, increasing attrition rate. We are witnessing buying in IT stocks led by expectations of a slowdown in rate hike from Federal Reserve. Most of the company’s management has clearly indicated that attrition rate has peaked out and it would come down gradually in coming quarters. The deal pipeline remains healthy for the IT companies with strong demand environment. We believe buying would be continued in this space."

Ameya Ranadive, Equity Research Analyst, Choice Broking said, "Nifty IT has witnessed a spectacular rally in the recent couple years, climbing from lows of around 11,000 to a high of 39,446, a 2.5x rise in the last two years. Since then, the Nifty has been in a corrective mode, falling around 32% since the beginning of this year. Nifty IT has underperformed Nifty by 30% since the beginning of 2022, when Nifty is up 4% and setting all-time highs, while Nifty IT is still 29% off its all-time highs, which is a significant disparity given that Nifty IT accounts for 14% of the Nifty index. Nifty IT has been consolidating in the 26450-30450 range for the previous three months, taking support and resistance along the way. IT is catching up to the Nifty, which is likely to break above its resistance zone of 30300-30450. Nifty IT is trading above its major small, mid, and long term moving averages, indicating positive momentum. The ADX, a strength indicator, is quoting at 30, indicating that this move has good strength. TCS and Infosys, which contribute about 26.30% and 27.42% to NIFTY IT, were major reasons for the movement. TCS rose 17% from its lows, forming a base around 2930 to 3000 levels. TCS is currently trading above its short, mid, and long term averages, indicating momentum. TCS is in an upward positive channel and appears to be on the approach of breaking out at the current level. We advise holding TCS for a target range of 3650 to 3700. Infosys, on the other hand, is comparable to TCS in terms of time and price consolidation. On a daily, weekly, and monthly basis, it appears to be robust. The ADX is at 30, indicating strength in this move. We predict that this trend will propel INFY to 1750 in the coming months."

Rajesh Sinha, Sr. Research Analyst at Bonanza Portfolio said, "In the last 1-2 months, we have observed consolidation in IT stocks and we feel that they are coming out of consolidation phase. Despite wide fears of recession in key markets of Indian IT services companies, consensus estimates do not suggest any recession. On an average, Indian IT services companies has saw earnings upgrade in 2QFY23 after sharp cut in 1QFY23 and some downgrades since 3QFY22. Even, most of the Indian IT companies has held or improve their constant currency (CC) revenue guidance for FY23, Infosys has improved to 15-16% against 14-16%, HCL Tech has improved to 13.5-14.5% against 12.14% while TCS has maintained double digit growth. Indian IT companies haven't seen any noticeable impact on demand yet but we are continued to remain watchful given the evolving macro situation. Even in Europe where clients are cautious, this has not translated into any demand impact yet. Even Gartner has forecasted that worldwide IT spending is projected to grow by 5.1% in 2023 to reach total of $4.6 trillion. In its report, it said that "Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives. We feel that Indian IT companies are coming out of the selling pressure that we have witnessed in the last 8-10 months. IT sector is already more than 28% down from its peak levels which indicates that the valuation is relatively cheaper for most of the IT stocks. As a result, most of large IT stocks recovered over 10% from their 52 week low, Infosys recovered 22% while TCS and Wipro recovered 17% and 10%, respectively."

Published on: Nov 30, 2022, 12:18 PM IST
Posted by: Priya Raghuvanshi, Nov 30, 2022, 12:12 PM IST
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