Thursday, October 8, 2009

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Infosys Q2 result to shed light on recovery

The quarterly results of Infosys often guide sentiments on Dalal Street. And when the country’s second-biggest IT exporter declares its second quarter performance on Friday, it is likely to provide much awaited cues to investors.

While analysts would look for tell tale signs of recovery in the global markets and billing rate movement, a rapidly appreciating rupee may bring to the fore the relevance of near-term guidance of Infosys.

For the first time in four quarters, Infosys is likely to report sequential growth in its dollar revenue, buoyed by decent volume growth. A dollar growth of 2-3 % would translate into near equal rise in the rupee-denominated sales since the latter has not drifted much against the dollar from the previous quarter.

Net profit is expected to grow at a slower pace, given higher selling and marketing costs. As always, the market will keenly follow Infy’s future growth guidance.

Infosys issues guidance based on the rupee-dollar rate at the end of the quarter, which is 48.11 for the September quarter. In the past few days, the rupee has appreciated by 3% to 46.68, which will not be reflected in Infy's guidance.

What should investors watch out for post-Infosys' results? Analysts feel that the IT bellwether's current valuations have already captured the possibility of decent growth and improved guidance.

On technical charts, the recent movement in open interest and volume with declining price reflect a weak trend for the scrip. Considering the open interest in the October options, Rs 2,250-2 ,220 is a crucial support range for the stock in the near future. The stock ended at Rs 2252.8 on Wednesday.

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