TCS Share Price Dip 3% on Tata Sons Stake Sale: Time to Buy or Wait?

Tata Sons, the holding company of the Tata Group has announced its intention to offload a portion of its stake in Tata Consultancy Services one of India's top IT firms. This strategic move aims to raise over a billion dollars to fuel investments in emerging sectors such as semiconductors, ecommerce and phone assembly.

TCS Stake Sale Details

According to the reports, Tata Sons plans to divest up to 23.4 million shares of TCS representing a 0.65% stake in the company through block deals. The targeted amount for this transaction is ₹9,362.3 cr. Currently, Tata Sons holds approximately 72.4% of TCS share price making it the second most valuable firm in India, shares are slated to be offered at a base price of ₹4,001 marking a 3.65% markdown from TCS closing price on National Stock Exchange on Monday.

Impact on TCS Share Price

News of Tata Sons stake sale has triggered a sell off in TCS shares, its share prices facing a downturn in Tuesday morning trading. TCS share price opened lower and reached an intraday low of ₹4,022 on NSE representing a decline of around 3% compared to the previous session's close price of ₹4,152.50. Stock market experts attribute this dip to the impending stake sale by Tata Sons. However, they suggest that the impact on TCS financials is expected to be minimal as the sale only constitutes 0.65% of the company's total paid up capital.

Expert Insights on TATA Consultancy Services

Saurabh Jain, Vice President of Research at SMC Global Securities attributed the drop in TCS share price to the news of Tata Sons planning to sell its stake in TCS. He expressed confidence that this stake sale by Tata Sons wouldn't impact TCS financials. Jain pointed out that TCS has been successful in securing numerous deals in US and European markets indicating a strong performance outlook. He suggested that this dip in share price presented an opportunity for medium to long term investors to accumulate more TCS shares while advising fresh investors to consider adding TCS shares to their portfolios during the current market correction.

Sumeet Bagadia, Executive Director at Choice Broking conveyed a positive outlook regarding the future of TCS shares. He noted positive chart patterns and identified crucial support levels at ₹3,950. Bagadia anticipated a potential bounce back in TCS share price stating that it could reach levels between ₹4,250 and ₹4,400 per share in the immediate term.

To Summarize

While Tata Sons decision to sell a portion of its stake in TATA Consultancy Services (TCS) has led to a temporary dip in the share price experts remain optimistic about the company's long term prospects. Investors are advised to consider this as an opportunity to buy TCS shares given its strong position in the IT industry and promising outlook. However, they should carefully evaluate market conditions and their own investment strategies before making any decisions.