For a change, calmer Infosys scrip

No wild price swings as earlier; observers believe stability would stay

Is Chairman Narayana Murthy’s ‘stamp of stability’ soothing the violent share price movement usually witnessed on the Infosys' counter on its earnings day? It appears so.

On Friday, with the Bangalore-based information technology giant’s results approximately in line with Street expectations, the shares (barring initial volatility) managed to avoid the extreme movements it had been infamous for till recently.

Over the earlier six quarters, the counter would had a wild intra-day movement of as high as 15-22 per cent. Not this time. On the BSE, the shares closed with a reasonable gain of 4.7 per cent or Rs 150, at Rs 3,274. Though it had an intra-day high of Rs 3,360 or 7.5 per cent during initial trade, this was far lower than on similar days in the past.

U R Bhat, managing director of Dalton Capital Advisors, says, "Infosys' Q2 results were in line with the market's expectations and there was no surprise, bad or good, which could fuel violent share price movement. It is Murthy's stamp of restoring stability." Earlier, the company came up with negative surprises and did not meet expectations, resulting in abrupt share price movement on the counter, he added.

The first half of this calendar year witnessed a sharp W-shaped share price movement on Infosys' counter. One recollects the quick ebb and flow between Rs 2,200 and Rs 3,000, making many fund managers either end in a trap by buying at higher levels or missing a buy at lower levels. Will the Infosys counter be able to maintain stability? Market participants have a positive stand.

Vibhor Singhal, vice-president (IT services & infrastructure) at Phillip Capital, says: “High volatility is not warranted now. I believe, after seeing several surprises in the past quarters, sanity is being restored on the counter. Going forward, I see more stability, as being a large-cap stock, wild movement should not happen."

Agrees Bhat: "I do not see either a dramatic fall or a dramatic gain in Infosys. It will be more stable, as I see the company will be able to meet expectations." Market experts believe the IT sector as a whole is heading for a re-rating. If it happens, it would not be surprising to see Infosys surpass levels of Rs 4,000. However, there is caution, too, as any negative global event could impact Indian markets and Infosys might not be able to keep itself aloof from such eventualities.