Wipro’s Stock Faces Headwinds Amid Global Economic Uncertainty

Wipro's Stock Faces Headwinds Amid Global Economic Uncertainty

VoM News Desk | October 30, 2023 | 05:30 PM IST | Breaking News | Follow on Google News

Wipro’s Stock Faces Headwinds Amid Global Economic Uncertainty

Wipro’s Stock Faces Headwinds Amid Global Economic Uncertainty

Indian major IT stocks are grappling with significant challenges, primarily driven by recession concerns in key economies, ongoing rate hikes by major central banks, a slowdown in deal wins, and lackluster earnings. Over the past year, the majority of large-cap stocks in this sector have struggled to keep pace with the broader market. Notably, Wipro’s stock has underperformed significantly when compared to its industry peers.

Stock Performance and Challenges

Wipro’s stock, which reached a high of ₹443.75 per share in September 2023, has seen a 14% decline, currently trading at ₹382. Furthermore, it has experienced a substantial drop of 48.36% from its all-time high of ₹739.85 per share, achieved in January 2021. In the year 2023, the stock recorded gains of over 5% in only one month, which was April. Currently, it is trading 7.6% above its five-month low of ₹355.

Disappointing Q2FY24 Results and Guidance

On October 18, Wipro reported weak financial results for the September quarter (Q2FY24) and provided a revenue growth guidance that fell below street estimates. The company posted a consolidated net profit of ₹2,667 crore in Q2FY24, which remained flat compared to ₹2,649.1 crore in the same quarter the previous year. However, the net profit showed a 7.55% decrease sequentially. The company’s consolidated revenue from operations also dipped slightly to ₹22,515 crore from ₹22,539 crore recorded in the September 2022 quarter. The IT segment revenue witnessed a 2.3% decline QoQ, amounting to ₹22,396 crore. For Q3FY23, Wipro anticipates revenue from its IT services business segment to be in the range of $2,617 million to $2,672 million, translating to sequential guidance of 3.5% to -1.5% in constant currency terms.

Market Sentiment and Future Outlook

Atul Parakh, CEO of Bigul, highlighted that Wipro’s recent underperformance in the past quarters has significantly affected market expectations. The company’s projection of a decline in Q3FY24 constant currency IT revenue, particularly in the BFSI vertical, has dampened investor sentiment. From a technical perspective, Wipro’s stock shows a pattern of lower highs and lows on weekly charts, indicating inherent weakness. Currently, major short- and medium-term moving averages are positioned above the stock’s market price, signifying strong resistance.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, mentioned that while Wipro’s stock has experienced a sharp decline in recent weeks, oversold indicators are leading to a bounce back in the current session. The immediate resistance is around 390–395, but it’s essential to note that significant outperformance is not expected. The stock has a critical support and accumulation area in the 350-370 range, aligning with three-year lows, while a formidable resistance zone is found in the 440-450 range.

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Disclaimer: The opinions and suggestions provided in this article are those of individual analysts and do not reflect the viewpoints of VoM News. We encourage investors to consult with certified experts before making any investment choices.

VoM News Desk

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