TCS share price drops 3% after Tata Sons stake sale news. Buy or wait for more correction?

Stock market today: Amid news of Tata Sons gearing to generate over a billion dollars by offloading some portion of its shareholding in Tata Consultancy Services (TCS), the share price of the Indian IT giant came under the sell-off heat during Tuesday morning deals. TCS share price today opened downside and went on to touch an intraday low of ₹4,022 apiece on NSE, logging around a 3% dip against the previous session's close price of ₹4,152.50 per share.

According to stock market experts, this dip in the TCS share price today is mainly due to the Tata Sons stake sale. However, they said that such TCS news will be effective for the short term as the stake sale is to the tune of 0.65 percent of total paid up capital of the company, which won't have much impact on the financials of the Indian IT major. They advised medium to long-term investors to pounce on this opportunity as the outlook for the TCS share price is looking highly promising.

Is this is a stock to buy today?

Speaking on the reason for the drop in TCS share price today, Saurabh Jain, Vice President — Research at SMC Global Securities said, “TCS shares are nosediving today due to the news of Tata Sons planning to sell out its stake in TCS. However, in my view, this stake sale by Tata Sons won't have any impact on the financials of TCS. As the company has been winning a good amount of deals in the US and the European markets, I believe it's an opportunity for bottom fishing. Medium to long-term investors should try and accumulate more TCS shares whereas fresh investors should add TCS shares in their stock portfolio in the current correction.”

Expecting a bounceback in TCS shares, Sumeet Bagadia, Executive Director at Choice Broking said, “TCS share price is looking positive on the chart pattern. TCS shares have crucial support placed at ₹3,950 level. On the upper side, TCS share price is poised to touch ₹4,250 and ₹4,400 per share mark in the immediate term.”

TCS news

Mint has already reported that Tata Sons is gearing up to gather over a billion dollars by offloading a portion of its stake in Tata Consultancy Services as the conglomerate ventures into emerging sectors such as semiconductors, e-commerce, and phone assembly. The holding company of Tata group is set to divest up to 23.4 million shares, equivalent to a 0.65% stake in TCS, via block deals. The aim is to garner ₹9,362.3 crore ($1.12 billion), as per a term sheet accessed by Mint. At present, Tata Sons possesses approximately 72.4% stake in TCS, which stands as India's second most valuable firm. The shares are slated to be up for grabs at a base price of ₹4,001 each, marking a 3.65% markdown from TCS's closing price of ₹4,152.50 on Monday on the National Stock Exchange (NSE). Post this transaction, Tata Sons' shareholding in TCS is projected to decrease to roughly 71.7%.