TCS shares slip 9% from record high; should you enter in this IT stock at current levels?

Shares of Tata Consultancy Services slipped 2.97 per cent to hit a low of Rs 3,856 in Friday's trade. At this price, the counter has fallen 9.37 per cent from its record high value of Rs 4,254.45, a level seen earlier this week on Monday (March 18).

Indian IT stocks, including TCS, tumbled today after US software giant Accenture reduced its fiscal 2024 revenue forecast. Accenture is widely considered to be the bellwether for the Indian IT sector as its results provide cues into how clients in major Western markets are faring, key to their revenue flow.

Before this, TCS shares took a beating earlier this week after holding company Tata Sons sold 2.34 crore shares of the IT firm in a block deal, valued at around Rs 9,000 crore. Following the stake sale, Tata Sons' stake in TCS has declined to 71.74 per cent from 72.38 per cent earlier.

G Chokkalingam, founder and MD of Equinomics Research remained pessimistic on the IT sector. "IT service exports in dollar terms are likely to grow in single-digit in 2024. At the same time we don't see any drop in employee costs. Hence, at least for next two quarters, most IT services companies are likely to post single-digit earnings growth on a year-on-year (YoY) basis. Some could even see stagflation or decline in earnings, YoY. From a defensive perspective, one can consider holding large-cap IT stocks as there is still significant uncertainty on small- and mid-cap stocks," he stated.

Technical analysts largely suggested that TCS looked 'weak' on daily charts. Support on the counter could be seen around Rs 3,800 level. On the higher side, resistance may be found at the Rs 4,000 zone.

"For TCS shares, Rs 3,850-3,800 will be the support zone. On the higher side, we can see a bounce up to Rs 4,000 level," Ratnesh Goyal, Head of Technical Analysis at Arihant Capital, told Business Today TV.

"TCS stock price looks bearish on daily charts with strong resistance at Rs 4,008. A Daily close below support of Rs 3,805 could lead to a downward target of Rs 3,645 in the near term," said AR Ramachandran from Tips2trades.

"TCS looked weak on daily charts and it may slip towards Rs 3,600 level. Resistance will be at the Rs 4,000 zone," said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

In a separate development, TCS has signed a seven-year deal to transform global IT infrastructure for Denmark-based Ramboll.