Tech Mahindra shares down 40% in 2022 amid IT selloff. Good levels to buy?
- Tech Mahindra shares have fallen for three major reasons — employees' attrition, FIIs selling and weakness in US IT stocks listed at Nasdaq, say stock market experts
Tech Mahindra share price has been under sell-off heat after ushering in new year 2022. In year to date (YTD) time, this IT stock has nosedived from around ₹1784 to ₹1108 apiece levels, logging near 40 per cent dip in this period. According to stock market experts, Tech Mahindra shares have consolidated after huge selloff by FIIs. They said that like any other IT company, Tech Mahindra is also facing employees' attrition and FIIs selling. In March 2021, FIIs shareholding in Tech Mahindra stood at around 39.5 per cent that has come down at around 34.3 per cent in March 2022. They went on to add that there can be some more downside in the IT stock and it may go up to ₹1050 levels in near term. However, they advised positional investors to accumulate Tech Mahindra shares in ₹1,000 to ₹1,050 zone.
Speaking on the reasons that has pulled down Tech Mahindra shares, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Tech Mahindra shares have fallen for three major reasons — employees' attrition, FIIs selling and weakness in US IT stocks listed at Nasdaq. Like any other IT company in India, Tech Mahindra is also facing higher attrition rate of its employees that has led to rise in its input cost. Apart from this, Tech Mahindra has remained FIIs favourite stock since pre-Covid times. In FY22, FIIs stake in Tech Mahindra has slumped from around 39.5 per cent to 34.3 per cent. So, Tech Mahindra has become a victim of FIIs selling that got further accelerated after US Fed become neutral to hawkish on interest rate hike."
Avinash Gorakshkar went on to add that Indian IT companies follow US IT companies as they get business from the US IT companies through outsourcing. As US stocks are under stress that is getting reflected in tech heavy Nasdaq's performance in last few months, the overall sentiment for IT companies in global markets have become negative. So, Tech Mahindra shares have fallen despite being a quality stock and giving reasonably better quarterly numbers compared to its peers.
On Tech Mahindra share price outlook, Mudit Goel, Senior Research Analyst at SMC Global said, "Tech Mahindra shares are looking weak on chart pattern and it may go up to ₹1,050 apiece levels in near term."
For those stock market investors who want to buy Tech Mahindra at such a discounted price, Rohit Singre, AVP — Technical Research at Bonanza Portfolio said, " ₹1,000 to ₹1,050 apiece levels looks good accumulation zone for positional investors. So, those who have Tech Mahindra shares in their portfolio can accumulate further in this zone whereas fresh buyers can add TechM in their portfolio in this zone maintaining stop loss at ₹950 levels. If the stock sustains in the given zone, then we can expect strong bounce back in the counter and it may give 10-15 per cent upside in near term."
Echoing with Rohit Singre's views, Avinash Gorakshkar of Profitmart Securities said that TechM will be one of the major beneficiaries of 5G roll out in India. As the Indian government has made it clear that 5G roll out in India will be completely a 'made in India' affair, TechM share price may give sharp upside moves in next 4-5 years once it comes out of the consolidation phase.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint
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