Wipro's stock is now 48% below its peak; this is an excellent moment to purchase

 Wipro's stock is now 48% below its peak; this is an excellent moment to purchase

Major Indian IT equities have been under severe pressure due to a slowdown in contract wins, lackluster results, continued rate rises by major central banks, and fears about a recession in important countries. Most large-cap companies in this sector have underperformed in the last year when compared to the overall markets. Notably, in contrast to its industry counterparts, Wipro's shares underperformed considerably.

The stock has dropped 14% from its peak of ₹443.75 a share in September 2023 to trade at ₹382. Furthermore, it has fallen by 48.36% from its peak of ₹739.85 a unit, which was reached in January 2021. The stock had only one month in CY23—April—with a gain of more than 5%. It is now trading 7.6% away from ₹355, its five-month low. 

On October 18, the business released a second set of unimpressive financial results for the September quarter (Q2FY24) and gave poor sales growth projection that was below market predictions. In Q2FY24, the firm reported a combined net profit of ₹2,667 crore, which was unchanged from the ₹2,649.1 crore in the same period the previous year. Nonetheless, there was a sequential decline in net profit of 7.55%.

From ₹22,539 crore in the September 2022 period, to ₹22,515 crore, its overall income from operations decreased somewhat. Revenue for the IT category decreased by 2.3% on a quarterly basis, totaling ₹22,396 crore.

The business segment that provides IT services is expected to generate revenue for Q3FY23 between $2,617 million and $2,672 million. In constant currency terms, this corresponds to sequential guidance of 3.5% to -1.5%.

Positively, big-deal TCV increased by 79% YoY in CC to $1.3 billion, while overall bookings increased by 7% YoY to $3.8 billion.

Bigul CEO Atul Parakh said that the market's expectations have been greatly affected by Wipro's recent poor performance in the last several quarters. Investor sentiment has been negatively impacted by the company's expectation of a fall in Q3FY24 constant currency IT revenue, which ranges from 3.5 to 1.5% sequentially, primarily in the BFSI sector.

"The stock price clearly shows this tendency. Many in the market are closely observing the quarter's profits, which are crucial. I think Q4FY24 profits will bottom out, indicating possible growth in the IT industry," he said.

According to Atul Parakh, the stock's weekly chart pattern of lower highs and lows suggests intrinsic weakness. This is according to technical analysis. All of the stock's significant short- and medium-term moving averages are now above the market price, indicating strong resistance.

He said that the three-year lows in the 350–370 region will serve as a crucial support and accumulation area, while the 440–450 range is ready to provide strong resistance. 

According to Rajesh Bhosale, an equity technical and derivative analyst at Angel One, "Wipro's stock has seen a sharp decline over the last several weeks. We are seeing a reversal in the current session since the indications are oversold. With 390–395 acting as the next immediate barrier, this rebound may continue in the near future. Nevertheless, there hasn't been any significant outperformance, so traders should be cautious when dealing with this counter. Approximately 370 is the stock's immediate support."