Tata group stock gearing for gains, charts show; share price may rally 14% in 3 months

Tata group stock gearing for gains, charts show; share price may rally 14% in 3 months

Indian equity markets started the week with losses amid weak global cues. S&P BSE Sensex was down more than 300 points or 0.50% to give up 59,300, while NSE Nifty 50 index fell 150 points or 0.48% to 17,600. According to analysts, the overall trend remains strongly bullish, however, further profit booking is to be seen this week. Traders are advised to continue with a stock-specific approach. Amid the volatility, analysts at ICICI Direct have chosen Tata Communications as their gladiator stock pick. This Rekha Jhunjhunwala portfolio stock is expected to rally 14% in three months.

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According to the ICICI Direct report, the telecom sector has been regaining traction after 3-4 months of breather. Within this space, the analysts are buoyant on Tata Communications as it is seen resolving out of a falling channel containing decline since January 2022. “This signals the end of the corrective phase and resumption of primary up move, thus offering a fresh entry opportunity,” they said. The stock has generated a breakout above the last three month’s range of Rs 1122-857 as buying demand has emerged from the 200-week EMA currently placed at Rs 895, and the 80% retracement of the previous major up move of September 2020 to January 2022, signalling a positive price structure.

The brokerage expects the stock to continue its current up move and head towards Rs 1275 levels in coming months as it is the 80% retracement of the April-June decline of Rs 1400-857. “Among oscillators, the weekly 14 period’s RSI is in a strong up trend and is seen sustaining above its nine period’s average, thus validating the positive bias,” it said. So far this year, Tata Communications share price has tanked 20.04 per cent, underperforming benchmark Nifty 50 which is down just 0.2 per cent.

According to ICICI Direct, Tata Communications’ strategic growth plan, focused approach and structural improvement in data segment margins has driven multiple re-rating. While deal closures, delays and supply chain issues have led to slower recovery in revenues, the demand outlook is robust in the medium to long term. Furthermore, a stable performance and improved cash flow generation, deleveraging possibilities and improved return ratios bode well for the company. “With cash flow generation consistency and growth levers like cloud, edge & security, IOT, etc, we remain constructive on the company,” the brokerage said.

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Late billionaire investor Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala held 30.7 lakh shares or 1.08% stake in the company till 30 June 2022.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)