TCS Breaks Below 3,000-Mark to 16-Month Low! Is Bull Run Over?

  • Stock Market Analysis

This entire week had been a negative one for the Indian equities market as both the frontline and midcaps stocks have seen a decent correction. The Nifty 50 index has lost around 2.11% so far for the week, last trading at 15,878, by 2:48 PM IST. 

Some of the index heavyweights which have been a drag on the index were HDFC Bank (NS: HDBK ) and ICICI Bank (NS: ICBK ), both falling 2.94% and 0.83%, respectively so far for the week. However, one frontline share that holds a decent weightage of around 4.45% in the index and putting pressure on the Nifty 50 is the IT major Tata Consultancy Services Limited (NS: TCS ).

TCS is the largest IT consultancy company in the country, having a market capitalization of INR 11,11,894 crores. The share price of TCS was one of the best performers in the large-cap IT space after the pandemic lows as the entire IT pack took off due to an unprecedented demand for the IT infrastructure to facilitate the new work-from-home regime.

Image Description: Weekly chart of TCS showing a breakdown

Image Source: Investing.com

However, for the last few months, the stock has only been tumbling, making a lower low and lower high formation, which is a classic representation of a downtrend. From the all-time high of INR 4,043, marked on 17 January 2022, the stock has plunged more than 26.1% to the current market price of INR 2,988, which tags TCS shares to be in a downtrend. A stock that falls more than 20% from the 52-week high is technically termed to be in a bear run.

However, the concern now is more than just a bear run. On the weekly chart, TCS shares have breached their major support level of INR 3,000 and marked a new low of INR 2,967.2 which is the lowest level since March 2021. As the stock had already been tumbling, the break of this major support would probably trigger a fresh selling spree. 

What’s more interesting is the record plunge of the rupee is also not helping to curb the fall in IT stocks. A strengthening dollar against the rupee is considered to be a positive trigger for the IT space as a major chunk of their revenue comes from outside the country. Hence, the current view on IT stocks is quite bearish. The Nifty IT itself has cracked below the 52-week low of 26,399.75, marking the lowest level since May 2021.

Coming back to TCS, if the stock gives a weekly closing below the INR 3,000-mark, then investors might need to run for a cover, as the next support level seems to be present around INR 2,880 - INR 2,850, and a break below this would only make the downtrend more prominent.

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  • Nishesh Kumar @Nishesh Kumar
    I could see july expory closing at around 3250
    Like 0
  • NAGARAJA RAO @NAGARAJA RAO
    Great analysis I short TCS got 1lak thank you so much sir 🙏
    Like 0
  • Arvind Murty @Arvind Murty
    Its any chance to reverse in end of july ???
    Like 0
    • Ajit Pardeshi @Ajit Pardeshi
      no
      Like 0
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  • shashikant swami @shashikant swami
    agreed
    Like 0
  • Ria Singh @Ria Singh
    very informative
    Like 0
  • nilesh gajbe @nilesh gajbe
    agreed
    Like 0
  • nilesh gajbe @nilesh gajbe
    agreed
    Like 0

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