Why Wipro Share Price is Falling

The Indian IT sector is facing so many headwinds these days, it's hard to keep track of the reasons behind the decline.

IT firms such as TCS and Infosys are also trading near their 52-week lows. Mid-size IT companies like Mphasis and Coforge are also facing similar troubles.

We recently wrote to you about why Mphasis share price is falling and why Coforge share price is falling. In today's article, we will talk about the Nifty 50 company Wipro and reasons dragging the stock lower.

Under the current circumstances, Wipro is one of the worst-hit Indian IT stocks. In the past one month, Wipro share price has fallen around 8%. This week, on 29 March 2023, shares of Wipro hit a new 52-week low of Rs 355.

The impact of US banking crisis on Wipro

It appears the recent US banking crisis has taken a toll on Wipro's shares. The crisis has an indirect impact on Tier-I IT companies. The collapse of large banking institutions may not only lead to a reduction in existing business but it reduces tech spending in the future along with delayed deal closures.

The banking, financial services, and insurance (BFSI) segment is the largest vertical for Indian IT services companies, contributing significantly to their revenue.

According to a report by The Economic Times, among top Indian IT firms, Wipro generates the highest revenue from the BFSI segment at 35%.

Wipro's segmental mix (2021 and 2022)

A possible cost-cutting measure in the BFSI segment may cause the company's revenue to fall significantly.

During financial year 2022, the company earned around 27% of its revenues from the US. Any reduction in the BFSI spending of US companies is like a double-edged sword for Wipro.

Wipro geography wise segmentation (2021 and 2022)

Hence, a potential threat to the BFSI segment is dragging down Wipro's share price right now. But shares of the company have remained under pressure since a long time, owing to different reasons.

Consistent selling by FIIs

Another reason behind the decline is continuous selling by foreign institutional investors (FIIs).

FIIs have continuously sold stakes from Wipro in the last six quarters. FII holding stood at 9.8% in the quarter ending June 2022.

Wipro shareholding pattern (June 2021 to December 2022)

Quarter ending	Jun-21	Sep-21	Dec-21	Mar-22	Jun-22	Sep-22	Dec-22
Total FII holding (%)	9.8	9.7	9.3	8.1	7.0	6.6	6.3

Data Source: Ace Equity

For more details, check out Wipro's latest shareholding pattern.

Other reasons why Wipro shares are falling

Rising interest rates and growing fears of recession in the US continue to dampen investor sentiment.

Indian IT companies are also worried that reduced IT spending by the US and European clients will sharply hit their own profits after a pandemic-led boom.

A couple of months ago, we wrote to you about these reasons in detail. You can check it out here: Why Wipro share price is falling.

How Wipro share price has performed recently

In the past one month, shares of Wipro are down around 8%. On a YTD basis, Wipro is down 9.4%

Wipro has a 52-week high of Rs 609.4 touched on 05 April 2022 and a 52-week low of Rs 355 touched today on 29 March 2023.

About Wipro

Wipro is one of the leading global IT, consulting and business process services companies.

Wipro was incorporated in 1945 as Western India Vegetables Product Limited. It was a consumer care product manufacturer till 1980 after which it diversified into the IT services business.

With effect from 1 April 2012, the company demerged its other divisions (consumer care and lighting, medical equipment, and infrastructure engineering) into a separate company called Wipro Enterprises Limited (WEL)

Wipro's operations can be broadly classified into IT Services, IT Products, and India State Run Enterprise.

For more details about the company, you can have a look at Wipro Company fact sheet and Wipro quarterly results on our website.

For a sector overview, you can read our IT sector report.

You can also compare Wipro with its peers on our website:

Wipro vs TCS

Wipro vs Infosys

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...