Tera Software Ltd Hits Lower Circuit Amid Heavy Selling Pressure

Intraday Price Action and Circuit Breaker Trigger

On 8 January, Tera Software Ltd’s share price plunged to an intraday low of ₹405.3, representing a 4.99% drop from the previous close. The stock’s price band for the day was ₹5, with the highest traded price recorded at ₹430.0. The weighted average price leaned closer to the day’s low, indicating that the bulk of trading volume clustered near the lower end of the price range. This downward momentum culminated in the stock hitting its lower circuit limit, a regulatory mechanism designed to curb excessive volatility by halting further declines for the day.

Volume and Liquidity Insights

Trading volumes were relatively muted, with total traded volume amounting to 0.11625 lakh shares and turnover standing at ₹0.48 crore. Notably, delivery volumes on 7 January had already declined sharply by 66.77% compared to the five-day average, signalling waning investor participation. Despite this, liquidity remains adequate for modest trade sizes, with the stock’s liquidity assessed at 2% of the five-day average traded value, supporting trade sizes up to ₹0.02 crore without significant price impact.

Sector and Market Comparison

Tera Software Ltd underperformed its sector peers, with a one-day return of -3.54% compared to the sector’s -1.93% and the broader Sensex’s -0.81%. This relative underperformance highlights the stock’s vulnerability amid broader market weakness and sector-specific headwinds. Over the past three trading sessions, the stock has declined by 6.77%, reflecting sustained selling pressure and investor caution.

Technical Positioning and Moving Averages

From a technical standpoint, the stock remains above its 200-day moving average, a long-term support indicator, but trades below its short- and medium-term moving averages (5-day, 20-day, 50-day, and 100-day). This positioning suggests that while the stock has some underlying support, recent momentum has turned negative, with short-term trends signalling weakness. The clustering of traded volume near the day’s low further reinforces the bearish sentiment prevailing among market participants.

Investor Sentiment and Panic Selling

The sharp decline and lower circuit hit reflect a wave of panic selling among investors, likely triggered by a combination of profit booking and concerns over the company’s near-term prospects. The stock’s Mojo Score currently stands at 78.0, with a Mojo Grade of Buy, downgraded from Strong Buy on 5 December 2025. This downgrade indicates a tempered outlook from analysts, who may be factoring in recent price weakness and sector challenges.

Market Capitalisation and Company Profile

Tera Software Ltd is classified as a micro-cap company with a market capitalisation of approximately ₹535 crore. Operating within the Computers - Software & Consulting industry, the company faces stiff competition and rapid technological changes, which may be contributing to investor caution. The downgrade in Mojo Grade suggests that while the company retains fundamental strengths, near-term risks have increased.

Unfilled Supply and Selling Pressure

Despite the heavy selling pressure, the stock’s traded volume remains relatively low, indicating that a significant portion of supply remains unfilled. This imbalance between sellers and buyers has exacerbated price declines, pushing the stock to its circuit limit. The lack of sufficient buying interest at lower levels suggests that investors are reluctant to enter positions until clearer signs of stability emerge.

Outlook and Strategic Considerations

For investors, the current scenario presents a mixed picture. The stock’s position above the 200-day moving average offers some technical support, but the persistent downtrend and reduced delivery volumes highlight caution. The downgrade from Strong Buy to Buy signals a need to reassess risk exposure and monitor upcoming corporate developments closely. Given the micro-cap status and sector volatility, investors should weigh the potential for recovery against the risk of further declines.

Conclusion: Navigating Volatility in a Micro-Cap Stock

Tera Software Ltd’s recent plunge to the lower circuit limit underscores the challenges micro-cap stocks face amid market volatility and sector-specific pressures. Heavy selling, unfilled supply, and declining investor participation have combined to create a precarious trading environment. While the company’s fundamentals and long-term technical support remain intact, the near-term outlook is clouded by uncertainty and cautious investor sentiment.

Market participants should remain vigilant, closely monitoring volume trends, price action, and any corporate announcements that could influence sentiment. The downgrade in Mojo Grade and the stock’s underperformance relative to its sector and the broader market suggest that a wait-and-watch approach may be prudent until clearer signs of recovery emerge.

Unlock special upgrade rates for a limited period. Start Saving Now →