Market Movers: TCS’ fall marks emergence of first doubt on bull run in IT

Mumbai: The doubters were out of their shell in full glory today as information technology stocks buckled under the weight of investors’ lofty expectations.

India’s largest IT services company

saw its stock dive over 6 per cent in one of its biggest falls this year following an underwhelming earnings performance for the quarter ended September.

More than the Q2 performance, however, TCS’ stock became a victim of the over-the-top expectations that investors themselves had placed on a company trading at historic one-year forward valuations. Today’s episode, therefore, marks the beginning of the emergence of first doubt in the bull market in IT stocks over the past one year.

What remains to be seen is if investors will taper their expectations or will TCS show in the future that Q2 was merely an aberration.

A muted debut for AMC

Despite the vociferous risk appetite on display in the Indian stock market, one of the primary vehicles of investing in that market could not benefit from it. Shares of Aditya Birla Sun Life AMC listed a little higher than its issue price of Rs 712, in what was a tepid debut compared to recent listings.

The listing reflects the current sentiment among investors for asset management companies, who are struggling not only to justify their fee structure in the face of pervasive underperformance but also facing competition for investors’ wallets from burgeoning appetite for direct equity investing.

Sterling and Wilson gets booster shot

Shares of the renewable energy company jumped over 6 per cent after

said its new energy arm will be acquiring a 40 per cent stake in the company. For Sterling and Wilson, RIL is a god send as it means that it no longer has to worry about its former parent repaying their loans.

The company is now under the umbrella of RIL and given the conglomerate track record, one can be assured that good days have just begun for the solar power company.

Pre-earnings buying

saw its stock surge 7 per cent in trade as investors prepared themselves for what could be strong earnings delivery from the company for the September quarter this Saturday.

The company’s Q2 update had shed light on a strong recovery post the impact of the second wave of the COVID-19 pandemic. With the domestic largely back to pre-pandemic levels in terms of mobility, grocery retail is likely to provide robust commentary on future demand and footfalls.

ITC warming up for a new move?

After the trend-breaking September rally, shares of ITC seemed to have gone off the boil in October so far. However, the shares surged nearly 3 per cent in a surprising move that dealers said could be driven by hopes for announcement of healthy Q2 earnings later this month.

Technical analysts have suggested that the stock’s breakout last month should take it to levels of around Rs 280 in the medium-term. Perhaps, today’s gains are a sign that the stock is warming for a year-end surge.

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