No other stock traded on the
Indian bourses reacts consistently the way Infosys does. A swing of 8-10% on the
result day is normal for the stock.The ‘long strangle’ option strategy (buying
an out of the money call and similar number of out of the money puts) is
something that most option traders practices on Infosys’ result day. The build
of position in the stock is the main reason for the stock movement.
This quarter
the ‘calls’ have won. Infosys surprised the market by announcing better than
expected numbers resulting in the stock shooting over 11%. However, the devil
is in the details. While the market has reacted sharply to the numbers, it is
the consistency of these numbers that is key for the long term revival of
sentiments in the stock....
The
Good
· Better than
expected all round performance with revenue, margins and net profit above
market expectations
· Strong
sequential volume growth of 4.1% against 1.8% in the previous quarter
· Company has
maintained its guidance against expectations of a cut in current year revenue
target
· Management is
cautiously optimistic for rest of the year, which is a much better choice of
words as compared to complete confusion in the previous quarter
The Bad
· Discretionary
spend by clients continues to be stressed
· Pricing was
flat. An improvement in pricing is one of the first tell-tale signs of
improvement in external scenario
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