Street Signs: Nifty support seen at 19,600, Buyback cushion for TCS & more

Defying odds at 19,600: A rocky start, but smooth sail ahead

Despite a turbulent start due to the Israeli-Palestinian conflict, the benchmark National Stock Exchange Nifty managed to eke out a half-per cent gain last week. While the 50-share index fell during the past two trading sessions, strong buying emerged around the 19,600–19,650 levels. Technical analysts believe that as long as this zone is protected, the market may not fall significantly. “The strength may continue as long as the index remains above 19,600. Only a decisive fall below 19,600 might trigger serious long unwinding in the market; until then, a buy-the-dips strategy can be considered. On the higher end, resistance is visible at 19,850, which, if breached, the Nifty might move towards 20,000,” said Rupak De, senior technical analyst at LKP Securities. The Nifty last closed at 19,751.

TCS buyback: A silver lining in the IT clouds

Information technology (IT) companies are on shaky ground as the uncertain demand outlook has prompted analysts to scale back revenue growth assumptions for the industry. Last week, the National Stock Exchange Nifty IT Index fell 1.6 per cent, underperforming the benchmark Nifty by nearly 2 per cent, as results of industry leaders Tata Consultancy Services (TCS) and Infosys disappointed. Analysts believe IT stocks may continue to underperform in the near term. However, TCS could be an exception, thanks to its Rs 17,000 crore buyback. “The buyback plan could provide certain technical support until the closure date and help TCS outperform the Nifty IT Index by 2-4 per cent (going by the stock’s performance during previous buyback periods),” said a note by ICICI Securities. The buyback price announced by TCS is Rs 4,150 per share, 16 per cent higher than its last close of Rs 3,570.

IRM Energy IPO: Fuelling dreams at 13% premium

Shares of IRM Energy, a gas distributor, were commanding a grey market premium of close to 13 per cent ahead of its Rs 544 crore initial public offering (IPO). Market sources said IRM’s shares traded at Rs 570, compared to its price band of Rs 480–505 per share. Through the IPO, which opens for subscription on Wednesday and closes on Friday, IRM is looking to raise Rs 544 crore in fresh capital, which will be used to fund its expansion and reduce debt. At the top end of the price band, the company is valued at Rs 2,074 crore. For the quarter ended June 2023, IRM had a net profit of Rs 27 crore on revenues of Rs 245 crore.