Shares of India's third-largest IT exporter Wipro, which have been among the worst performing Nifty stock in the last one-year period, failed to spark any reversal in the bearish stock outlook. Wipro shares are already down 14 percent from its 52-week high level of Rs 444.65, hit on August 17, 2022. The stock has gained half-a-percent in Tuesday's trade.
On NSE, Wipro shares were trading 0.49 percent higher at Rs 382.75 apiece during afternoon deals. The stock has fallen over 1 percent in the previous five trading sessions. On a year-to-date basis, the stock has tumbled 2.66 percent, while it fell 10 percent in the last one year.
With a target of Rs 360 on the counter, analysts at Motilal Oswal Securities have suggested a 6 percent downside potential, citing weak prospects due to lowest FY24 organic growth among Tier-1 IT Services companies, with margin below the management's medium-term guided range of 17.0-17.5 percent.
Although the Bengaluru-based firm has signed 55 large deals with an overall TCV of $3.9 billion (+66.5 percent year-on-year), Motilal said the deal conversion remains a challenge with large deal timelines witnessing extensions and creating near-term leakages.
In its latest note on the Tier I IT firm, the brokerage said that selective pockets, including BFS, Hi-Tech, Retail and Consumer, are exhibiting signs of caution in their technology spends due to lingering inflation and weak consumer spending.
Conversely, demand in Telecom appears positive, where clients are reprioritising spends to monetise their 5G investments. Additionally, Healthcare, Utilities and Automotive are showing strong resilience amid the adverse macro situation, Motilal said.
According to analysts, Wipro's FY23 annual report highlighted that enterprises are doubling down on reprioritising spends in to achieve operational excellence and cost takeout programs, while strongly focusing on reducing discretionary spends.
Analysts are now awaiting a further evidence of Wipro's refreshed strategy execution and a successful turnaround from its growth struggles over the last decade before turning more constructive on the stock.
Tech View
In terms of technicals, the 14-day relative strength index (RSI) of the stock stands at 39.1. RSI below 30 is considered oversold and above 70 overbought. Money Flow Index (MFI) is at 16.8, which indicates the stock of Wipro is strongly oversold. This implies that stock may rebound, according to data from Trendlyne.
The stock has a one-year beta of 1, indicating average volatility during the period. Wipro shares are is trading higher than the 5 day moving average but lower than 20 day, 50 day, 100 day and 200 day moving averages.
First Published: Jun 27, 2023 2:37 PM IST
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