Tata Consultancy Services (TCS), India’s prominent IT firm, is facing a disconnect between its operational performance and market sentiment. The company’s stock has plunged 33 per cent from its peak, including a 25 per cent drop in 2025 alone, despite strong Q1FY26 results and continued dividend payouts.Recently, the tech giant’s announcement of large-scale layoffs, with 12,000 employees set to be let go.Also read: IT ministry ‘closely monitoring’ 12,000 job cuts, claims report; IT union calls tech firm’s move illegalTechnical indicators point to sustained downward pressureDespite TCS reporting stable fundamentals and beating earnings estimates in Q1FY26, its stock performance tells a different story. Analysts point to weakening technical signals and broader investor sentiment as key factors behind the persistent decline. “TCS has broken below a rising trendline on the weekly chart with strong volumes, which signals intensified selling pressure,” said Mandar Bhojane, Equity Research Analyst at Choice Broking, as quoted by Economic Times. Bonanza’s Technical Analyst Drumil Vithlani also noted TCS is nearing support levels last seen in October 2022. “Long-term investors can consider staggered accumulation between Rs 3,060 and Rs 3,000 with a stop loss at Rs 2,900. The next bounce, if it comes, could aim for Rs 3,270 and Rs 3,415,” he said. On the fundamentals front, Q1FY26 results were encouraging. Net profit rose 6 per cent year-on-year to Rs 12,760 crore, beating estimates. Revenue climbed 1.3 per cent to Rs 63,437 crore, although constant currency revenue dipped 3.1 per cent—mainly due to the scaled-down BSNL contract. Operating margin improved by 30 basis points sequentially to 24.5 per cent, with operational cash flow at Rs 12,804 crore. Attrition stabilised at 13.8 per cent, but international business saw a 0.5 per cent sequential decline. However, market sentiment took a hit with TCS’s announcement to cut 12,000 jobs- about 2 per cent of its workforce- mainly in middle and senior management. The move, tied to internal restructuring and a revised bench policy, echoes a broader trend in the IT industry, which added just 3,847 jobs in Q1. Despite the turbulence, many analysts remain optimistic. Motilal Oswal maintains a Buy call with a target of Rs 3,850, while Nuvama sees potential up to Rs 3,950. Antique and Nomura, though slightly trimming estimates, still expect future gains. Ultimately, TCS’s current scenario presents a paradox: technical weakness versus operational resilience. While short-term volatility may continue, analysts suggest the deep correction could offer opportunities for long-term investors willing to wait for a turnaround.(Disclaimer: The opinions, analyses and recommendations expressed herein are those of brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.)
