Shares of Tata Communications rise 15%. What drives the madness?

Shares of Tata Communications rose as much as 14.8% to Rs 1,948 on Friday, making them among the top gainers on the NSE, as investors piled into heavy volumes amid growing optimism around the stock. The rally marks a gain of almost 21% over the past six sessions.

The trading momentum was evident with 35.86 lakh shares changing hands and generating a turnover of Rs 657.42 crore. Nearly 3 lakh shares were traded on the BSE by afternoon, the highest in almost two months and well above the 20-day average of 65,000 shares. Tata Communications’ market capitalization stood at Rs 53,722.50 crore, reflecting growing investor confidence in the major telecom and cloud solutions provider.

Technical data points to bullish momentum

From a technical perspective, Tata Communications is trading above all eight of its major simple moving averages (5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day and 200-day SMAs), indicating strong bullish undertones in the short- and long-term charts. The Relative Strength Index (RSI) stands at 62.9, indicating that the stock is neither overbought nor oversold, while the Moving Average Convergence Divergence (MACD) remains at 10.1 above the center and signal lines, reinforcing the ongoing uptrend.

The buzz of synergy fuels optimism

The increase follows TCS’s announcement of plans to develop 1 GW of AI-driven data center capacity over the next five to seven years. Market experts say Tata Communications, with its robust data connectivity and cloud infrastructure network, could be a big beneficiary. The stock could also see a boost in its DC-to-DC (data center-to-data center) connectivity business, in line with Tata Communications’ existing global data solutions portfolio. TCS management hinted at synergies with other Tata Group companies during its second-quarter earnings call, reinforcing expectations that Tata Communications could play a crucial role in the emerging AI and data center ecosystem. Meanwhile, shares of TCS fell nearly 2% on Friday after reporting weaker-than-expected September quarter earnings. Despite the miss, several brokers remained optimistic, highlighting its long-term strategic positioning and new growth drivers that could boost the stock price by as much as 21% from its last close.

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