Shares of Infosys are expected to encounter substantial selling pressure in Friday’s trading session. According to market analysts, Infosys announced its Q2FY24 results when the Indian stock market was closed, but global exchanges were active. Following the disclosure of Infosys results on Thursday, the Infosys American Depositary Receipt (ADR) price on the New York Stock Exchange (NYSE) faced significant selling pressure. The Infosys ADR price declined by 6.53 percent on Thursday, indicating dissatisfaction with the Q2 results for 2023.
Why Infosys share Fall 4% in stock market
As predicted, Infosys shares opened lower at ₹1405 and swiftly reached an intraday low of ₹1400 on the National Stock Exchange (NSE), registering a 4.50 percent dip within a few minutes of the stock market’s opening on the same day. Simultaneously, Infosys ADR price at NYSE commenced at $16.40 per share, approximately 7 percent below its Wednesday close of $17.61 per share. It eventually concluded at $16.46, reflecting an almost 6.53 percent decrease from its Wednesday closing value. Stock market analysts suggest that the Indian markets typically follow the response of the NYSE market, particularly post the announcement of quarterly results. After Infosys announced its Q1FY24 results and witnessed a significant decline at NYSE, the Indian stock market followed a similar pattern in the subsequent session. Consequently, there is an anticipation of selling pressure on Infosys shares at the opening of the stock market.
Prashanth Tapse, Senior Vice President of Research at Mehta Equities, attributed the decline in Infosys share price on Friday to disappointing Q2 earnings and a downward revision in revenue guidance. He noted that the revised guidance for FY24, featuring a lower revenue growth projection, might weigh on Infosys share prices, despite the company maintaining its margins. Tapse suggested that from a technical standpoint, the last-minute fall in prices indicates unfavorable results for bulls and a possible gap down opening near ₹1400 apiece levels in the opening trade. He also highlighted weak global market sentiments, influenced by higher-than-expected US GDP data, as a contributing factor to the expected bearish trend.
Avinash Gorakshkar, Head of Research at Profitmart Securities, expressed expectations for the bearish trend in Infy shares to persist. He cited disappointment in Infosys results and the company’s lowered guidance for FY24 as the primary reasons for the dent in Infosys’s share price. Following the announcement of Q2 results in 2023, Infosys adjusted its revenue growth guidance to 1%-2.5%, down from the earlier range of 1%-3.5%. Despite the change in revenue guidance, Infosys maintained its operating margin guidance for the year at 20%–22%. The unexpected element was the downward revision in revenue growth for FY24, particularly after Infosys had already reduced its FY24 revenue outlook in Q1FY24 from 4%-7% to 1%-3.5%.