Infosys Share Price Downtrend Continues As Dividend Payout Looms

Summary:
• The Infosys share price formed a death cross in mid-May, and the dividend payout set for May 31 has added to the pressure. Is it time to buy?

Infosys share price declined on Thursday, as investors readjusted their positions ahead of a dividend pay. The shares traded at Rs. 1,434.90, down by 1.11 percent in the intraday session at the time of writing. That puts it on course to register the third successive trading session in the red. Furthermore, the share price is currently below the 200-day SMA of Rs. 1503.16 and the 50-SMA of Rs 1,465.41, signaling a bearish momentum. The share price formed a death cross in mid-May, and could be ripe for a correction after the dividend payout period.

 The company declared a cash dividend of Rs. 20 per share and a special cash dividend of Rs. 8 per share, payable from May 31, 2024. The company reported an increase in consolidated net profits from Rs 6,134 crore to Rs 7,969 crore for the first quarter of 2024.

The dividend pay is about 3.1 percent, which is significantly higher above the average industry payout of 1.9 percent of the earnings. Some investors may see this as appealing, while some might be concerned that the company is,perhaps not as aggressive in reinvesting into the future, at a time when there is cutthroat competition in the AI front. That said, Infosys fundamental look strong, and the CEO Salil Parekh recently stated that there would be no job cuts at the company, despite the industry-wide trend seen this year. According to him, the company is integrating technologies, including generative AI,  that will help create new jobs instead.

Technical analysis

The momentum on the Infosys share price is currently controlled by the sellers and the RSI calls for further downside. The trend will likely continue if resistance persists at 1,432.20, with the first support likely to be at 1,423.85. A continuation of control by the sellers at that point will likely break the first support and potentially send the price lower to test 1,415.10. Alternatively, if the price breaks above the 1,432.20 pivot mark, the buyers will likely take control, but will encounter another resistance at 1,440.15. An extension of that control will breach the resistance and invalidate the downside narrative. Also, it could result in stronger upward momentum to test 1,448.15.