Earnings season is around the corner and the Q2 numbers by the US-based IT firm Accenture are encouraging. But there is no material change on fundamental side that can justify a 10 per cent surge in shares of Wipro BSE -1.10 % this quarter.

What is perhaps supporting the stock is the recent buyback announcement, Nomura India said, adding that history of IT buybacks suggests that the stock may come under pressure in next 4-8 weeks as the buyback ends.In a note to clients, the brokerage noted that the stock has seen a 30 per cent re-rating, even as the IT major has seen a 7 per cent cut in consensus EPS estimates for FY19.

This, Nomura India said, suggested that the re-rating has likely been driven by corporate actions, buyback and bonus announcements, rather than fundamentals.

The stock has risen 22 per cent this calendar, compared with 8 per cent fall in shares of InfosysBSE 0.35 %, 4 per cent rise in TCS BSE -1.08 % and 5 per cent rise in HCL TechnologiesBSE -0.14 %. Wipro shares turned ex-buyback on September 15. In line with mega IPOs announcement by tier I peers. The company will soon kick start its Rs 11,000 crore share buyback.

The brokerage noted the recent buybacks of TCS (concluded in May this year) and Wipro 2016 saw a 6-7 per cent run up in the stock price post the buyback announcement, only to see weakness up to the record date, as the window to buy stock to participate in the buybac closed.

Analysts said the rejig may result in a slight increase in Nifty50 EPS estimates for FY18, but a fall in FY19 estimates due to increase in free-float market capitalisationBajaj Finance has been included in the benchmark with 1 per cent weight, taking NBFCs’ combined weightage in the index to 9.5 per cent, up about 90 basis points. HPCLBSE 3.23 % has entered the index with 0.9 per cent weight, making it the first time in the history of the benchmark when all three OMCs are a part of the index. Meanwhile, UPL will enter the index with 0.8 per cent weight.
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