Infosys shares up 7% in 2 days; can it rally more after tomorrow's buyback announcement?

Synopsis

Infosys shares experienced a 2% surge, reaching Rs 1,535 on the BSE, ahead of its fifth share buyback meeting. Historically, Infosys shares have generally risen following buyback announcements. Market experts suggest that current valuations are more appealing, with the stock consolidating at lower levels.

Shares of IT major Infosys gained 2% to an intraday high of Rs 1,535 on the BSE, ahead of its share buyback meeting scheduled for Thursday, September 11. If approved, this will be the company’s fifth share buyback.

Data from ET Intelligence Group (ETIG) shows that from the day of such announcements, Infosys shares rose on three out of four occasions over three- and six-month periods. During one-month periods, however, performance has been mixed.

The last buyback took place in 2022, when the company spent Rs 9,300 crore to repurchase shares via the open market. In fact, all of the last three buybacks were conducted through the open market, not via the tender offer route. It remains to be seen whether the company will adopt the tender offer or the open market route this time.

“The last buyback didn’t really help the stock deliver much in the medium to long term. However, the current scenario looks different — valuations are now more attractive than they were back then, and the stock has been consolidating at lower levels for quite some time,” market expert Neeraj Dewan said.

From a technical standpoint, Infosys’ relative strength index (RSI) has risen to 53.27, according to StockEdge data. An uptrend signal is generated when the RSI crosses above 50 from below. “RSI trending up” indicates rising values, suggesting renewed momentum in the stock price.

At around 11:20 am, shares of Infosys were trading at Rs 1,530, up 1.7% from the previous close. The stock remains down more than 18% year-to-date.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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