Stock in Focus: Can TCS spring back from current levels?

Since mid-September, TCS has been rolling down by almost 14%. However, it is presently trading near its support. So, can TCS bounce back from here? Let’s find out.

The Q2 FY22 earnings reported by Tata Consultancy Services Ltd (TCS) is quite encouraging. On October 8, 2021, TCS reported a net profit of Rs 9,624 crore for the quarter ended September 30, 2021, on a consolidated basis as compared to Rs 7,475 crore in the same quarter year ago. This is an increase of near about 29%.

In Q1 FY22, this IT heavyweight posted a net profit of Rs 9,008 crore. This means that on a sequential basis, the net profit jumped almost 7%. The revenue from operations of TCS boosted to Rs 46,867 crore in the recent quarter as against Rs 40,135 crore in Q2 FY21. This shows 17% growth, while the revenue growth in constant currency was around 15% over the same quarter last year. Moreover, the board has also approved a second interim dividend of Rs 7.

That being said, the market felt nothing exciting about it as it failed to close above the resistance level of 3,990 and continued moving downward. There is good support placed at 3,403 levels as it also acts as an important Fibonacci level of 23.6%. However, the stock fails to hold on to this level, the further fall can be expected around 3,130 to 3,050 levels. However, in the upward direction, two major resistances would be placed at 3,707, 3,945 and 3,990 levels.

Let’s understand how technical indicators look for this stock.

Starting off with Relative Strength Index (RSI), on weekly basis, it is taking support at current levels of 51. However, it is trading almost 10 points below its 20-Week Exponential Moving Average (EMA). Moving Average Convergence Divergence (MACD) though in positive territory, is showing negative crossover on weekly basis.

Hence, as of now, it would make sense to stay put and watch out for important support and resistance levels to take appropriate decisions. At the time of writing, TCS was trading at 3,480 levels.