Trouble in tech-land? TCS share price tumbles! Reasons why - wage hikes, attrition, visa costs, rupee and more

The Information Technology behemoth, Tata Consultancy Services (TCS) will be rolling out this fiscal year's first quarter results today. TCS is expected to report better results than its rivals, but it may get hit in its margins this time due to wage hikes, high attrition, visa costs, and a strong rupee against US Dollar. Also the global trade tensions on the macro levels, Brexit uncertainties, BFSI (Banking, financial services, and insurance) moderated spends may hit growth of TCS and other IT firms. 

Ajit Mishra Vice President, Research, Religare Broking told Zee Business Online, ''The market tone is clearly negative and Nifty could inch further lower and test 11,400 ahead. Earlier, it was only the broader indices which were reeling under pressure and now the benchmark index has also joined in. With the beginning of the earnings season, participants will be closely eyeing the result of IT major, TCS result on Tuesday i.e. July 9. We advise maintaining 'sell on rise' approach and preferring hedged positions.''

In the last quarter, TCS posted a 17.7 per cent YoY growth in consolidated net profit at Rs 8,126 crore for the March 2019. This was against a net profit of Rs 6,904 crore in the year-ago period. Revenue of the software giant grew 18.5 per cent in the quarter under review to Rs 38,010 crore from Rs 32,075 crore in the corresponding period last fiscal. Meanwhile for the full year (2018-19), net profit was higher by 21.9 per cent at Rs 31,472 crore, while revenue increased 19 per cent to Rs 1,46,463 crore.

However, the stock price of the TCS tumbled over 2.5% on NSE to settle at Rs 2,120, sliding 55.40 points on Tuesday's session ahead of Q1 result announcements. Though the investors are eyeing TCS as a better performer among peers as it has continued to do better business in the market, which will make it even more watchful about it will do on the financial front. 

Sr Equity Technical Analsyt, Simi Bhaumik said, ''As far as held positions are concerned, the investors can remain hold in TCS as of now. There is a range bound from Rs 2,100 to Rs 2,200, but investors can buy at dips from Rs 2,100 to Rs 2,050 levels as it may show some correction after results, tomorrow. TCS is an overall good package for a longterm buying option, in the current market scenario.''