Tesco share price outperformed the FTSE 100 index on Wednesday. On the day when the benchmark index remained sideways, Tesco shares gained 3.7% due to a 3% upgrade in its profit guidance. Side by side, the British retail giant also expects food inflation to cool down, which may lead to increased revenue in the future.
Despite a strong bounce in Tesco, the broader market sentiment in the UK remained somewhat mixed. Initially, FTSE 100 gained 19 points due to Tesco’s upgrade. However, the benchmark index plunged to its new weekly low at the start of the trading session. At press time, the FTSE 100 index stands 0.23% above its previous close.
Tesco Reports Strong Financial Results
On Wednesday, the British retail giant announced £30.75 billion in sales, which was a 9% improvement in its year-to-year sales. A 14% increase in its operating profit was also reported. Additionally, the retail giant expects to earn profits between £2.6 billion and £2.7 billion in the next year.
The sudden improvement in sales can be attributed to the massive 12% price cut for 2,500 products. Alongside this, Tesco also introduced a new high-quality range of 150 products. The British retailer also reported a 10.6% improvement in its food sales as customers avoid eating at restaurants due to high prices.
LON: TSCO Daily Chart
Tesco Share Price Forecast
The chart below shows LON: TSCO has rebounded from 258p, which is very close to the 200 MA level. The next major resistance lies at 272p. If the shares reclaim the 272p level, a 6% rally toward the yearly high of 288p will be on the cards.
However, Tesco share price forecast will remain at a risk of flipping bearish if the price gets rejected from 272p. The 200 MA level, which lies at 256.6p on the daily chart, remains one of the major supports. In the event of a break below 256.6p, the price can suffer a correction towards its September lows.