Tata Consultancy Services (TCS) was an outlier in an otherwise bearish market with its shares hitting a 52-week high in intra-day trades after the company announced that its board would consider a share buyback proposal on October 11.

The country’s largest IT services firm hit an intra-day peak of Rs 3,680, a gain of over 1.65 per cent, which was its 52-week high. Later the scrip ended at Rs 3,637.25, marking a rise of 0.47 per cent over the last close. At the finish, TCS had a market cap of Rs 13.3 lakh crore.

The rally came even as analysts forecast IT firms to report sedate numbers for the quarter ended September 30, 2023.

For the quarter ended June 30, 2023, the cash in TCS books stood at nearly Rs 61,000 crore. Assuming it uses one-third of the cash for the buyback, its size could be up to Rs 20,000 crore.

Market circles added that hopes of a bigger buyback than the earlier ones drove its share prices on Monday.

The upcoming share repurchase will be its fifth: the first three buybacks in 2017, 2018 and 2020 were each of Rs 16,000 crore, while the fourth in 2022 was higher at Rs 18,000 crore.

Some brokerages expect the size of the latest buyback will be in line with the earlier ones, but some others expect it to be even above Rs 20,000 crore.

Morgan Stanley reportedly is estimating a size of Rs 18,000-22,500 crore.

The brokerage said while a buyback has been expected for the last two quarters, its latest announcement does not assure the outperformance of a stock.

Companies particularly in IT services have been returning surplus cash to shareholders in the form of a buyback. In a buyback, a company acquires its shares from the market or from shareholders, which are subsequently extinguished.

TCS will announce its results on October 11, followed by Infosys and HCL Technologies a day later on October 12, with Wipro on October 18.

"We expect Q2FY24, though seasonally strongest, to remain weak from a sequential growth perspective with quarter-on-quarter CC (constant currency) growth varying from -1 per cent (Tech Mahindra) to +1.9 per cent (HCLTech) among the top-five firms," ICICI Securities said in a note.