Why Tech Mahindra Share Price is Falling

The Indian equity market has experienced a rough ride in the calendar year 2023, facing back-to-back market shocks.

These indices took beating again in the first trading session of this week, with Indian benchmark indices ending the day deep in the red.

The indices snapped nine sessions of advances, breaking the longest gaining streak in 30 months as the S&P BSE Sensex Index slipped below the 60,000 level, whereas NSE Nifty 50 ended below the 17,800 marks.

The downturn was triggered by a massive selloff in major tech stocks, with IT stocks taking a severe hit.

Among them, Tech Mahindra emerged as the top underperformer to drag the overall indices.

Note that this is not the first time that bluechip stock Tech Mahindra has come under intense pressure. The stock experienced a similar decline in November 2022.

Let's dwell on the reasons for this downturn in Tech Mahindra.

#1 Slump in IT stocks

Nifty IT index on Monday slumped over 6%, while the BSE IT index witnessed a flash drop of 4.9% after sector giants Tata Consultancy Services (TCS) and Infosys posted a weaker set of numbers for the March 2023 quarter.

The management commentary of TCS and Infosys expressed caution about prevailing customer sentiments across BFSI, technology services and certain other verticals, particularly in the US market.

Moreover, the appreciation of the Indian rupee against the US dollar also contributed to the decline in IT stocks. The strengthening of the rupee has made Indian IT services more expensive for US clients, raising concerns about the demand for IT services from the US.

Following the update, shares of Infosys, Wipro, and Mphasis fell to their respective 52-week lows and experienced declines of up to 15%.

Tech Mahindra, being no exception to this falling downturn in the sector, fell prey to it.

#2 FII selling

FII's have reduced their stake in the company. FII holding stood at 27.9% in December 2022 quarter. It now stands at 26.8%.

The decrease can be attributed to the increasing interest rates in developed markets such as the USA, which has led to reduced attractiveness of emerging markets such as India, thereby prompting the sell-off of holdings in companies such as Tech Mahindra.

Moreover, the consecutive weak quarterly results have weighed down market sentiment, further fueling the selloff.

Quarter ending	Jun-21	Sep-21	Dec-21	Mar-22	Jun-22	Sep-22	Dec-22	Mar-23
FII’s Stake (%)	36.1	35.5	35.4	34.3	30.4	28.2	27.9	26.8

Data Source: BSE

In addition to FIIs, the promoters of Tech Mahindra have also disinvested their stake in the company

Promoter's holding Stood at 35.2% in December 2022 quarter. This further declined marginally to 35.15% in March 2023 quarter.

For more details, have a look a Tech Mahindra's latest shareholding pattern.

How Tech Mahindra shares have performed recently

Tech Mahindra shares have declined by more than 7% in a month. Over the past week, the company's shares have been trading lower by 6%.

Over the year, shares of the company have eroded over 23%.

Tech Mahindra touched its 52-week high of Rs 1,347 on 18 April 2022 while it touched a 52-week low of Rs 914 on 17 June 2022.

About Tech Mahindra

Tech Mahindra was formed as a joint venture between Mahindra & Mahindra, India's leading tractor and utility vehicle manufacturer, and British Telecommunications Plc. (BT), a leading global telecom services company.

It provides services like application development and maintenance, solution integration, product engineering and lifecycle management, testing, consulting, and managed services to global telecom companies.

The company's major focus areas are telecom service providers and telecom equipment, manufacturers. BT is one of TM's largest clients and has a long-standing relationship of over 20 years with the company.

For more details about the company, you can have a look at Tech Mahindra's fact sheet and Tech Mahindra's quarterly results on our website.

You can also compare Tech Mahindra with its peers on our website:

Tech Mahindra vs Infosys

Tech Mahindra vs TCS

Tech Mahindra vs HCL Tech

Since stocks from the IT sector interest you, check out the top IT companies in India.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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