Infosys stock price is hanging on a threat: buy the dip?

Infosys (NSE: INFY) stock price is hovering near its lowest level in 2022 after the company published weak financial results this week. Shares of the Indian giant dropped to a low of 1,400 INR in India and to $15.33 in New York. 

Infosys earnings and downgrade

Infosys published weak results that reflected the state of the global economy. The company’s revenue came in at $4.58 billion in its fourth quarter, which was about $149 million below what analysts were expecting. 

Its profit of 18 cents per share was also lower than what analysts were expecting and what the firm had guided before. For the year, the company’s revenue growth was 15.8%, helped by the digital business whose revenue grew by 25.6%. The company said this about its overall weak results in the fourth quarter.

“During the quarter, we saw unplanned project ramp downs in some of our clients and delays in decision-making, which resulted in lower volumes. In addition, we had some onetime revenue impact. While we saw some signs of stabilization in March, the environment remains uncertain.”

In all Infosys blamed several industries for its overall slowdown. It blamed the financial services, investment banking, telecom, and retail sectors. The banking sector was volatile as companies shifted to cash preservation following the collapse of Silicon Valley Bank and Credit Suisse.,

As a result, several analysts who follow Infosys downgraded the stock, warning that the situation will be volatile for a while. Analysts at Nomura slashed their outlook for the stock to neutral from buy. They lowered their target from 1,660 INR to 1,290 INR. Analysts at Citi also downgraded the stock citing near-term uncertainty.

Infosys stock price forecast

INFY chart by TradingView

The daily chart shows that the INFY share price has been in a downward trend and is now nearing the important support at 1,355 INR. It has struggled to move below this level several times since last year. The stock has also moved below the 50-day and 100-day exponential moving averages (EMA).

Therefore, at this stage, the outlook of the stock is neutral. A bearish breakout will be confirmed if the stock manages to move below the support at 1,355. Buyers should only buy the stock only if it moves above the important resistance at 1,635 INR, the highest point in December. Such a move will mean that there are still more buyers in the market.