Tech Mahindra Rs 1,956 crore buyback offer opens for subscription on Monday. The tech giant has planned to buyback 2.058 crore shares, representing 2.10 percent of the total number of equity shares in its paid-up share capital, at the rate of Rs 950 a share. The offer closes on 5 April.

The share price of Tech Mahindra rallied as much as one percent soon after to an intraday high of Rs 795.45 apiece.

Tech Mahindra's buyback offer is through a tender process on a proportionate basis and allows only shareholders whose names appeared on the company's books on 6 March will be allowed to participate in it. Its shares are likely to remain in focus.

Meanwhile, BSE's Sensex fell by as much as 0.95 percent in morning trade, despite opening above the 38,000-mark at 38,016.76.

Share buybacks allow the company to purchase stocks back from the shareholders and the offer is usually made at a price higher than the market rate. The reasons to go for it will be company specific but are usually done by cash-rich companies due to the high cost involved.

It is one of the ways a company decides to reward its shareholders besides bonus shares or dividends and in turn improves confidence in the management's view of business strength. This is Tech Mahindra's first ever buyback.