Wipro (NSE: WIPRO) (NYSE: WIT) shares are up 3.3% in India today. This move in WIPRO shares seems to be based on a rather hopeful story. It’s one that might be true, sure, but there’s a chain of logic here that may or may not come through. Thre’s no specific news here, nothing from the company. Their last release was that their staff in Israel are being asked to work from home. That seems reasonable enough and is not likely to be a price mover either.
The business line at Wipro: “Wipro Limited operates as an information technology (IT), consulting, and business process services company worldwide. It operates through three segments: IT Services, IT Products, and India State Run Enterprise Services (ISRE). The IT Services segment offers IT and IT-enabled services, including digital strategy advisory, customer-centric design, technology and IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, cloud and infrastructure, business process, cloud, mobility and analytics, research and development,” and so on. The point being that Wipro is part of a sector, there are a number of large Indian companies that work in this sector. Which is where the cain of logic starts.
Wipro share price from Google Finance
The start of the story being: “Indian IT major Tata Consultancy Services (TCS) is set to declare its September quarter earnings today. Besides the result, the market would be eagerly awaiting the outcome of its board meeting where it is likely to consider buyback of shares. The IT behemoth had earlier said its board of directors would consider and approve share buyback in its board meeting scheduled for 11 October. The market expects the buyback price to be around ₹4,300 to ₹4,500 per share and the TCS buyback size to be nearly ₹18,000 crore. With this, the Tata group company will be announcing its fifth share buyback in the last six years.” Tata Consultancy is not, of course, Wipro. But there has been, in the past, a certain amount of herd behaiour among the companies in this sector. “As per the information available on BSE website, TCS buyback is followed by other IT majors like Infosys, Wipro and HCL Technologies. After theannouncement of TCS buyback of shares, Infosys declared a buyback of shares in November 2017 at a premium of nearly 20%. Infosys buyback price in 2017 was at ₹575 per share.”
So, the chain of logic beng used here. It’s expected that TCS will announce a share buyback plan. Given history when one of the consultancies does then so do the others. Therefore Wipro shares are up in anticipation. That’s a fairly long chain of logic there and we’re not sure how much weight to put on the whole process.
