Tata Consultancy Services share price is staging a slow comeback in the past few weeks. After bottoming at ₹2,856 in October, TCS has rebounded by over 10% to the current ₹3,155. So, will this rally continue as it formed a bullish pattern?
Tata Consultancy Services has faced challenges this year
TCS, one of the top IT consulting companies in the world, has faced major challenges this year, which explains why the stock has plunged by nearly 30% from its highest point this year.
One of the biggest challenges is that Donald Trump recently raised the H1-B visa fees to $100,000 per worker from below $300. This decision means that it will find it difficult to take workers to the United States, one of their most lucrative markets.
Indeed, data shows that Indian firms have reduced their H-1B applications by 37%, the sharpest decline in decades.
Tata Consultancy Services stock also declined as companies embraced the new normal of tariffs in the United States. Historically, IT spending and marketing budgets are usually among the first to be cut when there are major issues.
At the same time, the company faced challenges when the US government started to assess contracts awarded to consultancy services under Elon Musk’s DOGE.
TCS is doing well despite the challenges
Still, there are signs that the company is doing relatively well despite the ongoing challenges. The most recent results showed that its revenue rose by 3.7% in the second quarter to ₹65,799 crore.
Tata Consultancy Services international revenue rose by 0.6%, while its top verticals including life sciences, manufacturing, banking, finance, and communications, had a strong performance.
TCS profits also did well in that quarter, with the operating margin rising by 70 basis points to 25.2%. The net income jumped by 8.4% to ₹12,904 crore, with its net margin coming in at 19.6%.
Tata Consultancy is now aiming to continue growing its business in the artificial intelligence (AI) industry. The company secured $1 billion from TPG to build data centers in the country. Together, the two companies will invest $2 billion in the next two years. These funds will go to HyperVault, TCS’s data center arm.
In a note, TCS said that it hopes that the deal will help it to boost shareholder returns, reduce its capital burden, and build a long-term value in the booming data center industry.
Analysts believe that TCS will benefit as American companies focus on India’s tech industry. Google has unveiled plans to spend $15 billion in the country, while Amazon and OpenAI plans to spend billions more.
TCS share price technical analysis
The daily timeframe chart shows that the TCS stock price has rebounded in the past few days. It has jumped from the year-to-date low of ₹2,856 to the current ₹3,150, its highest level since September 18.
The stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA). It is also about to move above the 23.6% Fibonacci Retracement level at ₹3,220.
Most importantly, the stock has formed an inverse head-and-shoulders pattern, one of the most bullish signs in technical analysis. It is about to move above the neckline at ₹3,175.
Therefore, the most likely scenario is where the stock continues rising, with the next key level to watch being the psychological point at ₹3,500, which is about 11% above the current level. A drop below the support at ₹3,050 will invalidate the bullish outlook.
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