Even as the Street expected another quarter of margin pressure, the market reaction to the September quarter results were mixed. According to FE analysis, stock prices of about 90 (53%) of 170 companies (from BSE 500) have reacted negatively to the results announcements against 45% that saw an uptick in share prices on the results day. There were about four stocks which did not witness considerable share price movement to the September quarter numbers.
According to Andrew Holland, CEO-Investment Advisory, Ambit Capital, the results so far have been in line with the market expectations with the topline showing marginal impact of the economic slowdown while the margins contracted further.
?Markets, however, had more or less discounted these expectations on a net basis and have become more reactive to the developments around European sovereign debt problems,? he said.
Among the Nifty companies that announced their results so far, the IT pack has showed mixed numbers. While TCS and HCL numbers disappointed the market, Infosys and Wipro beat expectations. September quarter numbers of Reliance industries were in line with the market expectations. However, the stock price showed a market adjusted decline of 3.5% on the results day. L&T, Bajaj Auto and Hero Motocorp were among big stocks which experienced a negative market reaction in spite of their results being in line with market expectations. On the other hand, Maruti Suzuki gained marginally on the results day as the Street had discounted a slump in its revenues, following the labour trouble at its Manesar plant.
More than 40% of the 90 companies that showed a relative underperformance to the broader market on their results day reported a positive growth in their September quarter net earnings. There were as many as 21 stocks which clocked better returns than the broader markets. The stocks that underperformed the market returns were down 2.4% on an average while those who outperformed the market gave excess return of 1.8% on an average.
To gauge the traders? reaction to the results, the share price movements of stocks were analysed on the day the quarterly results were announced. In cases where the companies announced their September results on Saturday or a holiday, the price movements of the very next trading day were taken for the study. Further, share price movements were adjusted to the Nifty movements to filter out the effect of broader market-led fluctuations in the scrips. For this a stock?s price movement of a company on its results day were compared with Nifty?s return day adjusted for its beta value.