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Wipro, Oh No: Stock Has Traded Below Moving Averages in 2016

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Jan. 26 2016, Updated 8:06 a.m. ET

Shareholder returns and stock trends

India’s (INDA) tech giant Wipro (WIT) generated investor returns of -7.5% in the trailing-12-month period and -7.7% in the trailing-one-month period. The company generated returns of 2% in 2015. The firm’s share price increased by 1% in the trailing five-day period.

Returns for Teradata Corporation (TDC), Infosys (INFY), Cognizant (CTSH), and IBM (IBM)—peer companies in the IT consulting subsector—generated returns of -39.5%, 9%, 14%  and -11%, respectively, in 2015.

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Moving averages

On January 15, 2016, Wipro closed the trading day at $11.05. Based on this figure, here’s how the company’s stock fares in terms of its moving averages.

  • 7% below its 100-day moving average of $11.91
  • 6% below its 50-day moving average of $11.78
  • 4% below its 20-day moving average of $11.46

Moving average convergence divergence and the relative strength index

A company’s MACD[2. moving average convergence divergence] is the difference between its short-term and long-term moving averages. Wipro’s 14-day MACD is -0.17. This negative figure indicates a downward trading trend.

Wipro’s 14-day RSI[3. relative strength index] is 39, which suggests that the stock is slightly oversold. Generally, if a company’s RSI is above 70, it indicates that the stock is overbought. An RSI below 30 suggests that a stock has been oversold.

Analyst recommendations

Out of four analysts covering Wipro’s stock, two have given it a “sell” recommendation and two have recommended a “hold.” The analyst stock price target for the firm is $10.73 with a median target estimate of $11.

Given these figures, Wipro is trading at a premium of 0.5% with respect to the median analyst price target.

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