Technically, for Wipro (CMP:589) immediate support zone is 580-568 & 562-553*. Sustaining below 553, it may fall to 548-541-536-530-512* & 504-498-484-471-465 zone in the worst bear case scenario.
On the upside, sustaining above 580, Wipro could target 592-600-622 immediately and further sustaining above that, it may further scale to 640-678 & 710 in the short to medium term. In the long term, only consecutive closing above 678-710 area, it may target 825-850 under bullish market conditions.
In short, sustaining above 600-622, Wipro may fly to 680-710 or consecutive closing below 562-540, it could crashed to 500-484 zone in the near future (as Q2FY16 guidance given by the management is below Nascom's industry average growth).
Bottom Line: Technical Trading Levels (Positional)
| SL</>5 | FROM SLR | |||||||||
| Wipro | CMP | 589 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 568 | 580 | 592 | 600* | 622* | 640 | 664 | 678-710 | <560 | |
| Weak < | 560 | 553-548 | 541-536* | 530-512 | 504 | 498 | 484 | 471-465 | >568 | |
Q1 result of Wipro published yesterday after market hours is largely in line/slightly above street estimates.But concern may be on soft guidance for Q2FY16 given by the management, which may be dubbed as below industry (Nascom) average growth. Purely on this factor, GS & CLSA downgraded Wipro to 510 level today as they sees pricing & margin pressure continues in the near term.
But management of Wipro is very much optimistic about the future and hinted better times ahead. Its US arms makes around 18% of its revenue from energy (Oil & Gas) sector. It sees calmer & less volatile global oil prices in the days ahead to revive spending on IT outsourcing by its energy & utility clients. With Crude oil price nearly bottoming out, $48-44 might be a good demand zone (considering the overall demand/supply dynamics viability of this sector), Wipro might be proved right.
Looking ahead, Wipro's investments & acquisitions of start ups & innovations, automation & digital technology (artificial intelligence) and big data management solutions may be the game changer to improve its appeal in the market. With stable situation in EU and improved North America, we may see better energy & telecom revenue growth than market expectation in the next couple of quarters.
"Digital India" theme and GST roll out all over India (software contract) may be helpful for all big IT companies and Wipro might be one of them in the days ahead.
As par BG metrics, current median valuation of Wipro may be around 700 and its projected fair valuations might be around 725-765-835 under the current market trends (FY:16-18).
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| WIPRO | 35.04 | 130.13 | 24.22 | 696.37 | 696.67 | 696.52 | 571.41 | 571.89 |
| WIPRO | 37.51 | 153.5 | 24.22 | 720.50 | 720.80 | 720.65 | 571.41 | 571.89 |
| WIPRO | 41.67 | 181.1 | 24.22 | 759.40 | 759.72 | 759.56 | 571.41 | 571.89 |
| WIPRO | 50.05 | 213.75 | 24.22 | 832.27 | 832.62 | 832.44 | 571.41 | 571.89 |
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