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Straight from the Specialists

India Markets Weekahead – Company results key for market direction

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(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)

Infosys stumped Indian markets again but for a change — positively. Recent management comments had built expectations of underperformance which led to cautious to negative views on the stock. Institutional investors were light on Infosys whereas the more adventurous speculators were short. And we were all caught on the wrong foot when the company declared a revenue growth as well as a net profit much better than consensus expectations.

The question is whether one should buy Infosys after this 17 percent surge? I would continue to be cautious as I believe the knee-jerk reaction is overdone. Does a better performance put Infosys back in line with the guidance given at the beginning of the year? Not really. Could this be a one-quarter wonder? It’s possible and I would await another quarter for confirmation.

The consensus on the street was that markets could be heading for new highs soon and this possibly was the biggest risk they have been facing in the short term. If not for Infosys, the markets may have broken important support levels on Friday. Unlike the underlying confidence in the past few weeks, the markets have displayed weakness in the last few days closing about a percent lower at 5952.

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