Tata Communications shares experienced a significant surge on Wednesday, climbing 6% to hit record highs. The stock reached a lifetime peak of ₹2,137.20 before closing 5.18% higher at ₹2,128.25. This sharp rise in the stock price highlights strong investor interest, particularly ahead of the company's quarterly results, where telecom firms are expected to perform well. Many analysts remain optimistic about the stock’s future performance, making it an attractive prospect for those focused on share market investment.
Strong performance across technical indicators
The share price traded above key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs), indicating a strong technical performance. The 14-day relative strength index (RSI) stood at 68.76, nearing the overbought zone but still under the critical 70 mark. A level below 30 indicates oversold conditions, while anything above 70 suggests the stock could be overbought.
Tata Communications shares boast a price-to-equity (P/E) ratio of 92.97 and a price-to-book (P/B) value of 6.13. With earnings per share (EPS) at ₹22.89 and a return on equity (RoE) of 6.60%, the stock's fundamentals remain strong.
Trading volume and market capitalisation rise
On Wednesday, the stock experienced high trading volume, with around 78,000 shares changing hands on the Bombay Stock Exchange (BSE). This was significantly above the two-week average of 14,000 shares, reflecting heightened activity in the counter. Turnover on the stock was ₹16.38 crore, contributing to Tata Communications’ market capitalisation of ₹60,655.13 crore.
Analyst outlook remains positive
Several market analysts have remained optimistic about Tata Communications’ future, emphasising the stock's potential for further growth. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted that the stock had been consolidating for three to four months. He suggested that recent buying interest could be attributed to expectations of strong telecom sector results. "Investors with a medium—to long-term view should hold on to the stock as it continues to show strength," Bathini said.
Technically, the stock remains well-positioned for further gains. Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, highlighted that the stock appeared strong on daily charts. He predicted that Tata Communications shares could reach ₹2,350 in the near term, advising investors to set a stop-loss at ₹2,050 for the trade.
Tata Communications’ global role
Tata Communications is a major player in the global telecommunications sector, carrying 30% of the world’s internet routes and connecting businesses to 80% of the world’s leading cloud providers. Additionally, the company serves 4 out of 5 mobile subscribers globally. As of June 2024, promoters held a 58.86% stake in the company, solidifying its strong position within the Tata Group.
Conclusion
With a promising technical setup and a strong market presence, Tata Communications continues to capture the attention of both retail and institutional investors. The stock's surge to record highs underscores growing confidence in the company, especially as it gears up for its quarterly results. For those considering share market investment, Tata Communications offers potential for both medium- and long-term growth.
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