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Tech Mahindra’s share price has been under the heat of the sell-off after entering the new year of 2022. Year-to-date (YTD), these IT stocks have fallen from approx ₹1784 to ₹1108 levels a piece, recording a decline of nearly 40 percent in this period. According to stock market experts, Tech Mahindra shares have been consolidating following heavy selling by FIIs. They said that like any other IT company, Tech Mahindra is also facing attrition and sale by FIIs. In March 2021, FII holdings in Tech Mahindra were around 39.5 percent, which fell to around 34.3 percent in March 2022. They added that there could be another dip in IT stocks and it could rise on the ₹1050 levels in the near future. However, they advised positional investors to accumulate Tech Mahindra shares ₹1,000 that ₹1,050 zones.
Talking about the reasons behind the drop in Tech Mahindra shares, Avinash Gorakshkar, head of research at Profitmart Securities, said, “Tech Mahindra shares fell due to three main reasons — employee exits, FII selling and weakness in US-listed IT stocks. Nasdaq. Like any other IT company in India, Tech Mahindra is also facing a higher attrition rate of its employees which has led to an increase in its input costs. Besides, Tech Mahindra has remained a favorite stock of FIIs since pre-Covid times. In FY22, FIIs’ Stake in Tech Mahindra fell from around 39.5 percent to 34.3 percent. So, Tech Mahindra fell victim to FII selling which was further accelerated after the US Fed went neutral on the hawks on rate hikes.”
Avinash Gorakshkar added that Indian IT companies are following US IT companies while getting work from US IT companies through outsourcing. As US stocks come under stress reflecting the tech-heavy performance of the Nasdaq over the past few months, the general sentiment for IT companies in global markets has turned negative. So, Tech Mahindra shares have fallen despite being a quality stock and delivering fairly better quarterly numbers compared to its peers.
On Tech Mahindra’s share price outlook, Mudit Goel, senior research analyst at SMC Global said, “Tech Mahindra shares look weak on the chart and may rise to ₹1,050 levels a piece in the near future.”
For those stock market investors looking to buy Tech Mahindra at such a discounted price, Rohit Singre, AVP — Technical Research at Bonanza Portfolio said, “ ₹1,000 that ₹1,050 level per piece looks like a good accumulation zone for positional investors. So, those who have Tech Mahindra stocks in their portfolio can further accumulate in this zone, while new buyers can add TechM to their portfolio in this zone by maintaining a stop loss at ₹950 levels. If the shares hold in the given zone, then we can expect a strong return in the stock market and it can give 10-15 percent rise in the near future.”
Echoing Rohit Singhre’s views, Avinash Gorakshkar of Profitmart Securities said that TechM will be one of the biggest beneficiaries of the 5G rollout in India. As the Indian government has made it clear that the 5G rollout in India will be fully ‘Made in India’, TechM’s share price could see a sharp rally in the next 4-5 years as it emerges from the consolidation phase.
Disclaimer: The views and recommendations given above are those of individual analysts or brokerage firms and not of Mint
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