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How stock markets will react to TCS earnings on Thursday?

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Tata Consultancy Services (TCS) told the market about its Q4 results Wednesday night, after the market had closed. Before the quarterly earnings report, both the Sensex and the Nifty 50 rose for eight days in a row. IT stocks went up because people bought them across the board. But TCS didn’t meet the expectations of Wall Street in Q4, even though its revenue and PAT grew by more than 10% year over year.

On Wednesday, the Sensex ended the day at 60,392.77, an increase of 235.05 points, or 0.39%. The Nifty 50 ended the day at 17,812.40, an increase of 90.10 points, or 0.51%.

The Nifty IT index went up by 304.55 points, or 1.06 percent, and ended the day at 28,980.30. Infosys rose the most, by 1.6%, followed by Coforge, which rose by 1.5%, LTI Mindtree, and Mphasis, which each rose by 1.2%. Both Persistent Systems and TCS went up by 1%. HCL Tech, Wipro, and LTTS all saw increases of between 0.5% and 0.8%.

In Q4FY23, TCS had a consolidated net profit of 11,392 crore. This was up by 14.76% from Q4FY22, when the company made 9,926 crore. This profit goes to the people who own shares in the company. The PAT for Q3FY23 was 10,846 crore.

On the top line, TCS made a total of 59,162 crore, which is 16.94% more than the 50,591 crore it made in Q4 of the previous fiscal year. In the December 2022 quarter, the company made 58,229 crore in sales. With the same amount of money, the growth of the review was 10.7% YoY.

During Q4, TCS’s net margins grew to 19.3%, while its operating margins stayed the same at 24.5%.

In Q4FY23, TCS closed more big deals than ever before. The order book for the company is worth $10 billion. The company has $34.1 billion in orders for the whole of FY23.

Head of Research at Stoxbox, Manish Chowdhury, said that TCS’s fourth-quarter earnings are mostly disappointing. In a tough business environment, the company’s revenue growth was at its lowest level in a number of quarters. The company also reported flat EBIT margins, which was a surprise because everyone expected them to get better. We think the North American business is still weak, and the low net additions to the workforce show this. The difficult macroeconomic environment is clear from the management’s cautious comments, and it will take a few quarters before the overall business performance returns to normal.

What to look for in markets?

Ajit Mishra, VP of Technical Research at Religare Broking, said that traders will react to TCS’s numbers during Thursday’s early trading, and the performance of other major IT companies will also be looked at. As of right now, rotational buying in the index heavyweights is helping the index inch up, and we think the current trend will continue with some consolidation in the middle. Traders should adjust their positions to match this and keep their attention on overnight risk management.”

Santosh Meena, Head of Research at Swastika Investmart, said, “It was the eighth straight session of gains for the Nifty and Sensex thanks to stable global cues, buying in the cash market, and short covering in the F&O market by FIIs.” Today, Nifty Pharma showed some strength because exports are going up and there are new worries about COVID-19. Also, fertiliser and sugar stocks did well in the market as a whole. When the market opens tomorrow, it will take in a lot of information. The US and UK inflation rates will be key, and the results of TCS will also be important.

Rohan Patil, a Technical Analyst at SAMCO Securities, says that Bulls will try to take over Thursday’s weekly expiry trade and keep the markets in the green. The overall trend is still going up, and any drop in the index will be a chance to buy more shares. The level of support for the Nifty is between 17,600 and 17,650, and the level of resistance is between 17,900 and 17,950. If the Nifty falls below 17,600, the next support zone will be at 17,400.

Investors will also pay close attention to Infosys’s Q4 numbers, which will be released on Thursday.

Disclaimer: The opinions and suggestions above are not those of Mint, but of individual analysts or brokerage firms. Before making any investment decisions, we tell people to check with certified experts.

Source: Team CurrencyVeda