Shares of Tata Consultancy Services (TCS) fell significantly on Tuesday after news broke about a planned share sale by its major shareholder, Tata Sons. The proposed sale, valued at up to 93.62 billion rupees ($1.13 billion), would involve offering TCS shares at a discounted rate.
The potential discount, with a floor price of 4,001 rupees per share, represents a 3.7% decrease compared to TCS's closing price on Monday. This news triggered a domino effect, causing TCS shares to drop over 3%. The decline in TCS stock price led the blue-chip Nifty 50 index and the Nifty IT index down as well.
Analysts attribute the share price drop to the combination of a discount sale and the use of block deals. While block deals are common practice, the discounted price point has spooked investors. With over 6 million shares already traded, this is TCS's busiest trading session since mid-January.
However, there's a silver lining. The sale is expected to increase the freely available shares of TCS, potentially attracting new investment due to a rise in weightage on major indexes.
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