Wipro Ltd: Navigating Challenges as a Nifty 50 Constituent Amid Institutional Shifts

Index Membership and Market Significance

As a key member of the Nifty 50, Wipro Ltd. holds considerable influence within India’s equity markets. Its inclusion in this benchmark index not only underscores its large-cap stature but also ensures substantial institutional and passive fund flows. The company’s market capitalisation stands at a robust ₹2,12,591.71 crores, categorising it firmly as a large-cap stock. However, despite this stature, Wipro’s recent price action and fundamental metrics have raised red flags among analysts and investors alike.

Wipro’s current share price is hovering close to its 52-week low, just 2.54% above the ₹199.2 mark, signalling persistent weakness. The stock opened at ₹204.4 on the latest trading day and has remained at this level, reflecting a lack of upward momentum. Notably, it is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — a technical indicator often interpreted as bearish.

Financial Metrics and Valuation Concerns

From a valuation standpoint, Wipro’s price-to-earnings (P/E) ratio stands at 15.89, considerably lower than the industry average of 22.40. While a lower P/E can sometimes indicate undervaluation, in this context it appears to reflect market scepticism about the company’s growth prospects relative to its peers. The stock also offers a high dividend yield of 5.47%, which may appeal to income-focused investors but has not been sufficient to offset broader concerns.

Wipro’s Mojo Score, a proprietary metric assessing momentum and quality, has deteriorated to 44.0, accompanied by a downgrade in Mojo Grade from Hold to Sell as of 17 February 2026. This downgrade signals a weakening outlook based on a comprehensive evaluation of fundamentals, price trends, and market sentiment.

Performance Relative to Benchmarks

Wipro’s recent performance starkly contrasts with the broader market benchmarks. Over the past year, the stock has declined by 31.21%, while the Sensex has appreciated by 9.76%. This underperformance extends across multiple time horizons: a 3.45% decline over the past week versus a 1.11% drop in the Sensex, a 13.74% fall over the last month compared to a flat Sensex, and a 23.04% year-to-date loss against a 3.90% gain in the benchmark.

Longer-term trends also paint a challenging picture. Over three years, Wipro has managed a modest 3.87% gain, significantly lagging the Sensex’s 38.13% rise. The five-year and ten-year performances further highlight this gap, with Wipro posting a slight negative return of 1.17% over five years versus the Sensex’s 66.79%, and a 103.36% gain over ten years compared to the Sensex’s 253.69%.

Institutional Holding Dynamics and Market Impact

Institutional investors play a pivotal role in shaping the fortunes of Nifty 50 constituents like Wipro. Changes in their holdings can influence liquidity, price stability, and overall market perception. Recent data indicates a subtle shift in institutional sentiment, with some large funds reducing exposure amid concerns over the company’s growth trajectory and competitive pressures in the IT services sector.

Such shifts can have a cascading effect on Wipro’s benchmark status. While the company remains a large-cap heavyweight, sustained underperformance and negative momentum could prompt index rebalancing committees to reconsider its weightage or inclusion in thematic or sectoral indices. This, in turn, would affect passive fund allocations and could exacerbate price volatility.

Sectoral Context and Peer Comparison

The broader IT - Software sector has delivered mixed results recently. Among 55 stocks that have declared quarterly results, 30 reported positive outcomes, 16 were flat, and 9 posted negative results. Wipro’s struggles stand out against this backdrop, especially given its sizeable market cap and historical prominence.

Peers within the Computers - Software & Consulting sector have generally maintained stronger momentum and valuation multiples. Wipro’s relative underperformance and downgrade to a Sell rating by MarketsMOJO highlight the need for investors to reassess their exposure to this stock in favour of better-performing alternatives.

Outlook and Investor Considerations

Given the current landscape, investors should approach Wipro with caution. The downgrade to a Sell rating reflects a comprehensive assessment of deteriorating momentum, valuation concerns, and sectoral headwinds. While the stock’s high dividend yield may offer some cushion, it does not compensate for the broader negative trends.

For long-term investors, the company’s historical performance over the past decade remains positive, but recent years have seen a marked slowdown. Active monitoring of institutional holding patterns and sectoral developments will be crucial to gauge any potential turnaround.

Moreover, the significance of Wipro’s Nifty 50 membership means that any substantial changes in its market capitalisation or performance could have wider implications for index composition and passive investment flows.

Conclusion

Wipro Ltd.’s recent downgrade and underwhelming market performance underscore the challenges faced by legacy IT firms in a rapidly evolving technology landscape. Its status as a Nifty 50 constituent ensures continued attention from institutional investors and index funds, but sustained underperformance may prompt strategic reassessments. Investors are advised to weigh the risks carefully and consider alternative opportunities within the sector that demonstrate stronger fundamentals and momentum.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today