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Informist, Wednesday, Apr. 9, 2025

By Anjana Therese Antony

MUMBAI – Aggressive short bets were added to the options chain of Tata Consultancy Services ahead of a likely muted March quarter result due Thursday. Premiums on deep out-of-the money calls halved and those on puts surged Wednesday. The bearishness towards the stock and all other industry peers also comes amid increasing worries about a possible recession in the US. This is because India's IT companies, including TCS, earn around half of their revenue from the world's largest economy. 

The stock closed lower again Wednesday after snapping a six-day losing run on Tuesday. The stock closed 1.4% lower at INR 3,246.60 on the National Stock Exchange and has fallen 24% since the December quarter earnings. Premiums on INR 3,300-INR 3,700 call options--which are 2-14% higher than the spot level--fell 25-45% to INR 5-INR 89.70, while those on put contracts which are 5-17% lower from the current market price increased 10-60%. 

For the quarter ended March, the Mumbai-based company is expected to post a 1.5% sequential growth in consolidated net profit to INR 125.63 billion and revenue is likely to rise 1.2% to INR 647.35 billion, according to the average of estimates from 16 brokerage houses. From a year-ago perspective, this would translate to 1% growth in the bottom line and 5.7% rise in the top line. Among major reasons for a muted growth would be the ramp-down in deals from TCS' key telecommunications client Bharat Sanchar Nigam. 

TCS is usually the first large-cap company to release its quarterly results and investors closely monitor its earnings to get clues about trends in other industry players in India. Though the IT behemoth does not give revenue growth guidance for the financial year, unlike some other companies such as Infosys and HCL Technologies, management comments will be tracked to identify what is expected in terms of US operations, deal wins, demand trends, and hiring plans, among others. Its comments particularly gains significance amid increasing tension between US and its key trading partners due to tariffs and the rising possibility of a recession in the US. In the December quarter, the company's revenue contribution from North America had declined to 47.7% from 50.6% a year ago. 

Shares of TCS and other IT companies primarily pulled down the Nifty 50 by 0.2% Wednesday. The index closed 0.6% lower at 22399.15 points and the Sensex ended 0.5% lower at 73847.15 points. Derivatives analysts pegged the near-term support for the 50-stock index at 22200-221000 points and resistance at 22450-22500 points. Analysts expect the selling pressure from foreign investors to continue in the near term and also anticipate further addition of short positions in index futures in the coming days. On Tuesday, FIIs increased their short positions to 76% from 75% a day ago. Traders also exited long positions from the April Nifty 50 contract Wednesday and open interest fell by 1% to 13.30 million.

--Nifty 50 Apr closed at 22504.00, down 126.35 points; 104.85-point premium to spot index

--Nifty 50 May closed at 22619.90, down 124.45 points; 220.75-point premium to spot index

--Nifty 50 Jun closed at 22717.70, down 132.40 points; 318.55-point premium to spot index

HDFC Bank, Muthoot Finance, State Bank of India, ICICI Bank, Bajaj Finance, Infosys, Tata Consultancy Services, Larsen & Toubro, Hindustan Aeronautics, Tata Motors, Axis Bank, Dixon Technologies India, Bharti Airtel, ITC, Wipro, Vedantaand were the most active underlying stocks Wednesday.  End

Edited by Deepshikha Bhardwaj

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